Tuesday 25th June 2019
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Comsure operates in:the UK, Jersey, Guernsey

Bank’s costly criminal error highlights the importance of following due probate process in Jersey

Jersey firms are warned to review their procedures within their businesses relating to probate procedures. In the recent case of The Attorney General v Abu Dhabi Commercial Bank PJSC, Jersey Bank, the Royal Court found a bank guilty of committing a criminal offence and fined the bank for not obtaining the necessary authorisation before transferring the assets of a deceased client out of the jurisdiction.

  1. For the first time, a financial institution in Jersey has been sentenced in the Royal Court for the offence of intermeddling under the Probate (Jersey) Law 1998 (“the Probate Law”).
  2. The case involves a Jersey branch of an international bank, which has been fined £25,000 and ordered to pay compensation of £2,085.27 for the offence of administering the movable estate situated in Jersey of a deceased person without a Grant of Representation having issued out of the Royal Court.

Background and facts of the matter

  1. Abu Dhabi Commercial Bank PJSC, Jersey Bank (the “Bank”) was charged with intermeddling, contrary to Article 23(1) of the Probate (Jersey) Law 1998.
  2. The deceased died on 1 June 2017 and held numerous accounts with the Bank in various jurisdictions.
  3. The account held with the Jersey branch held a balance of just over $400,000 at the date of the death.
  4. When the Bank was notified of the death, it attached a ‘no debit’ instruction on all of his accounts (per internal procedures).
  5. However, following the death of the deceased, a court in the United Arab Emirates (which had jurisdiction over the estate of the deceased) directed that all sums held by the Bank in the name of the deceased were to be transferred to the Court’s “Treasury” so that the deceased’s estate could be managed in accordance with UAE probate law.
  6. The transfer was made from the deceased’s account to comply with the order from the UAE.
  7. This amounted to the offence of intermeddling in the estate as the Bank dealt with assets of an estate without obtaining a grant of probate.
  8. A few weeks later the Bank’s branch manager in Jersey informed the Jersey Financial Services Commission that the monies had been paid to the UAE court by error and without obtaining the required Jersey grant of probate.
  9. The Bank also later self-reported the breach to the Registrar of Probate, copied to the Attorney General.

The arguments

The prosecution, on behalf of the Crown, contended that intermeddling was a serious offence.

  1. There was a significant risk of loss to the public due to the incompetence and malpractice of the defendant bank.
  2. Plus there was an even more significant risk of damage to Jersey’s reputation and integrity in commercial and financial matters.

It considered that the appropriate sentence would be a fine of £125,000, being approximately 2.5% of the total banking income.

By contrast, the defendant bank, giving an unreserved apology,

  1. described the incident as an accidental oversight by employees who should have known better.
  2. There was no loss to the rightful heirs and no fraudulent behaviour;
  3. the defendant bank had self-reported and cooperated fully with investigations.
  4. It had subsequently updated its policy on deceased customers, prescribed compulsory staff training and planned enhancement to their computer system to avoid human error in such circumstances.

The sentence and reasoning

The Royal Court agreed with the defendant bank’s assessment ane lessened the fine to £25,000. The Court described the offence as negligence.

It stated that there was no damage to the Island’s integrity because there was no intention to damage anyone or benefit fraudulently. It also noted that the purposes of the offence of intermeddling in the Probate Law are twofold:

  1. to prevent loss of stamp duty, and
  2. to avoid dissipation of estates by those not entitled to them.

Had there been any intention to avoid stamp duty or disinherit the rightful heirs, then the fine imposed would have been considerably higher.

Comment

It is pleasing that the Royal Court gave weight to the mitigating factors and reduced the Crown’s suggested fine of £125,000 to £25,000. Notwithstanding, it was a costly mistake, which no doubt caused immense stress for the staff and embarrassment to the defendant bank. It serves as a reminder to others to review their policies and procedures relating to deceased customers, to ensure their employees do not inadvertently commit intermeddling

 

Sources


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