Bank fined £25,000 for interfering with dead client’s money

Monday 01 October 2018

A Jersey-based bank has been fined in the Royal Court after one of its employees illegally transferred over $400,000 of a dead client’s savings.

Abu Dhabi Commercial Bank’s (ADCB) Jersey branch was ordered to pay £25,000 after admitting one count of ‘intermeddling’ on Friday, but maintained that it was done in error rather than with “intention to gain.”

The offence occurred after one of the bank’s clients, an Indian national, passed away in June last year. He held a number of accounts with the bank, including savings totalling over $401,000 (£307,435) held at the Jersey branch.

Following his death, a court based in the United Arab Emirates ordered that all sums held by ADCB in his name be transferred to the courts's 'Treasury’, so that his estate could be managed in accordance with the local probate law. Issued on 5 October, the order did not differentiate between accounts held in the UAE and those held elsewhere.

Pictured: The bank's employees were said to have thought the money should have been treated in line with UAE probate laws, rather than Jersey ones. 

When ADCB was informed of the man's death, on 12 October 2017, an instruction not to touch the accounts was in force, including the savings account.

A few days later, an employee based in the UAE contacted another local employee to ask that all the funds held with ADCB be sent to the UAE Court's Treasury. The second employee contacted two employees in Jersey to inform them. The Court heard that either the employees didn't know a transfer instruction was being prepared for the Jersey account or didn't realise that the money held in Jersey would need to be dealt with according to Jersey’s probate laws. 

The $401,000 was then transferred to an Abu Dhabi-based account in the deceased's name on 17 October. Crown Advocate David Hopwood told Court that the “no debit” instruction on the Jersey account must have had to be reversed to allow this transaction. The funds were then forwarded to the UAE Court's Treasury, along with all of the deceased's money.

The local branch manager informed the Jersey Financial Services Commission (JFSC) on 30 November 2017 that the man's funds had been withdrawn and paid to the UAE Court "by error and without obtaining the required Jersey Probate. The JFSC then contacted the Law Officers' Department and didn't take any regulatory action as they waited for the outcome of the prosecution. 

The bank refused to name the individual involved in the transaction, saying that "no individual could be singled out and that 'collective responsibility' was taken for the release of the funds."

Pictured: The JFSC was informed of the breach in November 2017.

Crown Advocate Hopwood told Court that the breach took place despite the existence of an ‘Offshore Deceased Customers’ policy, which states that accounts held in Jersey are subject to local laws, codes and orders. He said that in this case the Jersey account was seen by ADCB as being simply an asset of the deceased man to be dealt with according to the UAE probate laws, even though it was classed as an "offshore savings account."

"There should have been no mistake that the assets were based in a separate jurisdiction,” the Crown Advocate said.

The Court heard that the bank had been in touch to set out the steps it will take to improve its attempts to prevent such breach from taking place again. Crown Advocate Hopwood, however, said he had "no evidence as to the efficacy of the steps."

 Advocate John Kelleher, representing the bank, described the breach as an "accidental oversight," adding that it had taken place "in the face of a court order." He said the bank accepted it had committed an offence and apologised unreservedly.

He said that the breach had not occurred because someone was trying to avoid paying stamp duty. He added that no one was trying to take assets from the proper heirs, none of whom had been prejudiced by the transfer. He told Court: "There was no intention to break the law, there was no intention to gain."

Advocate Kelleher also said that the bank had cooperated completely with the JFSC and indeed provided most of the information the prosecution was based on.

The Bailiff, Sir William Bailhache, sitting with Jurats Pamela Pitman and Jane Ronge, described the breach as having by caused by "a mistake or two by the bank." He said the court had taken into the bank's mitigation and fined them £25,000, ordering them to pay an extra £2,085, the amount of stamp duty that should have been paid.