Credit Agricole loses suspicious transaction case

Credit Agricole must pay $9.8m to a wealthy Greek family after losing a long running court battle involving allegations it failed to ask enough questions about a suspicious transaction nearly 15 years ago.

The Privy Council decision, which upheld earlier rulings in favour of the Michailidis family, has wider significance for banks and their potential liability when they are found to have facilitated suspicious transactions.

The case centres around a former business partner, Robin Symes, an art dealer, who sold some art deco furniture known as the Eileen Gray collection for $15m in 2000.

The money was then allegedly misappropriated by Mr Symes. Following a series of complex transactions involving overseas holding companies, about $10m of the sale proceeds was paid to an account at the Gibraltar branch of Credit Agricole, held in the name of a company controlled by him.

"All these transactions were part of a fraudulent scheme devised by Mr Symes," according to the Gibraltar Court of Appeal ruling in the case.

The Greek family found out about the furniture sale in early 2001 and began multiple legal proceedings in England, Greece and Gibraltar - including this litigation against Credit Agricole.

No money laundering charges or allegations of money laundering have been brought against Mr Symes or the bank. However Mr Symes spent time in jail after being convicted of contempt to court

Mr Symes had been introduced to Credit Agricole by Edmond Tavernier, a director of the French bank's Swiss unit. Mr Tavernier, who has been an adviser to French billionaire Liliane Bettencourt, was a legal adviser to Mr Symes.

Credit Agricole said: "It was accepted by all the courts involved in this litigation, that there was no dishonest assistance or knowing receipt on the part of the bank and its employees and that the bank acted bona fide. It concerns matters that occurred over 15 years ago."

The latest Privy Council decision affects banks that are concerned about their potential liability to non-customer third parties who allege that a bank facilitated improper transactions. It also comes at a time when banks are facing increased scrutiny in their anti-money laundering and so-called "Know Your Customer" policies after a series of scandals.

Although Credit Agricole argued anti-money laundering requirements were not as advanced in 2000 as they are today, Judge William Aldous wrote in the appeal that was upheld that the bank still had a duty to inquire into the commercial purpose of transactions.

"The evidence was clear that in 2000 a bank should satisfy itself that there was a proper commercial reason for the arrangement. That the bank did not do," he wrote.

Ludovic de Walden, lawyer at Bird & Bird representing the family, said: "The transaction had no real commercial purpose. If things were legitimate, Symes could have simply deposited the money in London. The bank was effectively turning a blind eye."

"The attitude of the courts and public opinion [on money laundering] have changed dramatically as the law has evolved. Perhaps some banks have not adapted to the changes sufficiently quickly." he added.

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