Jersey and Guernsey Employment: Dismissal for Failure to File a SAR Confirmed as Gross Misconduct By Jersey Tribunal

The Channel Islands are well regulated jurisdictions, with rigorous and developed financial services regulation as well as strict anti-money laundering (“AML”) and combating the financing of terrorism (“CFT”) requirements. AML / CFT obligations are also applied to other sectors outside of regulated financial services businesses, including accountants, lawyers, and estate agents. It is important that businesses in both islands are aware of their AML / CFT obligations, and ensure that their employees are appropriately trained and supervised to ensure they comply with their duties.

In a recent Jersey Employment and Discrimination Tribunal (“Tribunal”) judgment, the Tribunal heard a claim of unfair dismissal from Mr Simon Dowling (“Mr Dowling”), an employee summarily dismissed for gross misconduct for failing to raise a suspicious activity report (“SAR”) whilst working for Concentric Analytics Limited (“Concentric”).

The Tribunal gave a firm stamp of approval to Concentric’s robust action in dismissing an employee who did not comply with AML / CFT policies. Employers can take comfort from this judgment, in the knowledge that in appropriate cases dismissal for breach of AML / CFT requirements can be justified and will be upheld by the Tribunal.

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Background

Concentric is a sustainable financial planning and investment advisory business based in Jersey. Mr Dowling was as an investment adviser at the Company and he was corresponding with a potential new client (“PNC”) in relation to its tax affairs. PNC repeatedly expressed to the Claimant concerns over disclosure to relevant tax authorities potentially resulting in “severe punishment including jail time,” and asked questions in relation to Concentric’s reporting duties if they had suspicions about a client. Another employee of Concentric came across this correspondence and immediately took the view that this should have been reported to the Money Laundering Reporting Officer (“MLRO”) through a SAR.

As a result, Mr Dowling became subject to a disciplinary hearing and was subsequently summarily dismissed for gross misconduct on the basis that he had failed to report the suspicious activity, which was required by both the Concentric handbook and by statutory obligations found in the Proceeds of Crime (Jersey) Law 1999. Mr Dowling submitted an appeal and this was considered by a director not involved in the original disciplinary proceedings. No new material or submissions were produced at appeal and the dismissal was upheld.

Mr Dowling brought a claim to the Tribunal and argued that he had not been made suspicious by the emails received by PNC and as such there was no obligation for an internal SAR. He also stated that his engagement with PNC was a “work in progress” and he was still gathering information about PNC. He sought to draw attention to the fact that he was not assisting anyone dealing with the proceeds of tax crime and there would have been more internal scrutiny before any potential onboarding commenced. It is worth noting Mr Dowling accepted, throughout the investigation, disciplinary proceedings and the Tribunal, that he should have passed the PNC emails to the MLRO.

Judgment

The Tribunal was unable to accept that Mr Dowling was not made suspicious by the email correspondence exchanged with PNC. Indeed, the Tribunal took the effort to set out some of the relevant emails in “deliberate length” at the start of the judgment to demonstrate “that the causes for suspicion were patent.” In reaching its factual conclusions on this aspect of the claim, the Tribunal looked to what it described as the “undisguised nature of the email passages,” the Claimant’s decades of experience, his recent training and his admission that at times he was “second guessing” PNC. Furthermore, the Tribunal noted that it did not find a “substantive distinction” between not filing an SAR and not forwarding the correspondence to the MLRO. The Tribunal stated that even had it not found that Mr Dowling was made suspicious by the email correspondence, Mr Dowling could have been found guilty for gross misconduct purely based on his admission of non-forwarding.

As a result the Tribunal held that this was gross-misconduct and dismissal was within the band of reasonable responses for an employer in Concentric’s position.

Conclusion

The judgment in this case is not surprising. Failure to comply with AML / CFT requirements could have exposed the employer to a number of serious risks including criminal and regulatory sanctions and the loss of their regulatory licences. The Tribunal has set down a clear precedent that employers can and should take a strong position on breaches of AML / CFT requirements, and that employers can require employees to pay “scrupulous attention to the processes of protection against money laundering which employers, the law and the well-being of the Island demands.”


GUERNSEY
Matt SandersManaging PartnerT +44 (0) 1481 748 914matt.sanders@walkersglobal.com
Sarah AshGroup Partner*T +44 (0) 1481 748 935sarah.ash@walkersglobal.com
Victoria PrattSenior CounselT +44 (0)1481 748 938victoria.pratt@walkersglobal.com

JERSEY
Jonathan HeaneyManaging PartnerT +44 (0)1534 700 786jonathan.heaney@walkersglobal.com
Daniel ReadSenior CounselT +44 (0) 1534 700 764daniel.read@walkersglobal.com
Jenny BruntonAssociateT +44 (0) 1534 700 766Jenny.Brunton@walkersglobal.com

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