Money Laundering and Dishonest Assistance

Amicorp Group, a Hong Kong-based corporate services provider, and its CEO, Toine Knipping, being sued in the British Virgin Islands (BVI) for alleged 'dishonest assistance. The lawsuit accuses Amicorp Group's operations in Barbados, British Virgin Islands, Curaçao, Hong Kong, and Singapore, and its Dubai-based CEO of:

• Helping to launder some of the $7 billion that was misappropriated from the Malaysian sovereign wealth fund 1MDB.

In understanding the Test Of Liability For Dishonest Assistance For Breach Of Trust And Fiduciary Duty, the following may be useful

"Dishonesty Means Dishonesty- Objectively".

A 2019 Court of Appeal unanimously overturned a trial judge's decision that an accountant was not liable for dishonest assistance for breach of trust and fiduciary duty for his part in a fraudulent money laundering scheme.

• Group Seven Ltd & Rheingold Management Incorporated v. (1) Notable Services LLP and (2) Martin Landman [2019] EWCA Civ 614,
• https://www.bailii.org/ew/cases/EWCA/Civ/2019/614.html

In reaching its decision, the Court of Appeal applied the Supreme Court's decision in Ivey v Genting Casinos (UK) Ltd (t/a Crockfords Club) [2017] UKSC 67, [2018] AC 391.

• https://www.supremecourt.uk/cases/uksc-2016-0213.html

IVEY

1. Ivey involved a professional gambler who had used the technique of "edge sorting" in the card game, Punto Banco, who appealed against a decision that a casino had been entitled to refuse to pay him winnings of £7.7 million on the basis that he had cheated. The gambler subjectively believed that edge-sorting was an honest technique.
2. The trial judge held that although the gambler was genuinely convinced that what he had done was not cheating, he had in fact cheated, thus breaching the implied term against cheating in his contract with the casino.
3. The gambler appealed, arguing that cheating necessarily involved dishonesty and that had not been demonstrated in his case because of his subjective belief that he was not acting dishonestly.
4. His appeal failed. The Supreme Court held in Ivey that the subjective element of the test for dishonesty in R v. Ghosh [1982] QB 1053 did not correctly represent the law.
5. When dishonesty was in question, the fact-finding tribunal had first to ascertain the actual state of the individual knowledge or belief as to the facts.
6. The question whether the conduct was honest or dishonest was then to be determined by applying the objective standards of ordinary decent people.

In their Group Seven decision, the Court of Appeal has now confirmed that:

7. "In the light of Ivey, it must in our view now be treated as settled law that the touchstone of accessory liability for breach of trust or fiduciary duty is indeed dishonesty, as Lord Nicholls so clearly explained in Tan, and that there is no room in the application of that test for the now discredited subjective second limb of the Ghosh test.
8. That is not to say, of course, that the subjective knowledge and state of mind of the defendant are unimportant.
9. On the contrary, the defendant's actual state of knowledge and belief as to relevant facts forms a crucial part of the first stage of the test of dishonesty set out in Tan.
10. But once the relevant facts have been ascertained, including the defendant's state of knowledge or belief as to the facts, the standard of appraisal which must then be applied to those facts is a purely objective one.
11. The court has to ask itself what is essentially a jury question: namely whether the defendant's conduct was honest according to the standards of ordinary decent people" [57].

The facts

12. The backdrop to the Group Seven case was a "brazen fraud" that deprived a Swiss company of €100 million.
13. The fraud was followed by
    • An attempt to launder the proceeds using the client account of a London firm of solicitors, Notable Services LLP,
    • Which was a multi-disciplinary partnership whose members included Mr Martin Landsman, an accountant.

14. Before Morgan J [2017] EWHC 2466 (Ch) (in a trial that took place before the Ivey decision), although Mr Landsman was found:
    • To have deliberately knowingly broken Rule 14.5 of the SRA Accounts Rules 2011 (which prohibits the provision of banking facilities through a client account), and
    • That his conduct concerning various requests for payments was found to be dishonest and
    • He knew facts which would have shown an honest and reasonable man that another person was not entitled to €100 million,
    • But he was still found to have not known (or have "blind-eye knowledge") that a company involved in the fraud, Larn Ltd, was not the beneficial owner of the €100 million, or that Larn was not entitled to use that money as if it were its own. 

15. The trial judge concluded that, without such knowledge, his conduct did not constitute dishonest assistance in the alleged breaches of trust and fiduciary duty.

On appeal

16. On appeal, that decision in Mr Landsman's favour was overturned.
17. Despite the meticulous care that the trial judge had exercised, the Court of Appeal was
    • "Reluctantly driven to the conclusion that the Judge's findings … about the absence of blind-eye knowledge by Mr Landsman as to the beneficial ownership of the €100 million in the hands of Larn cannot stand". 

18. The Court of Appeal considered
    • That the trial judge had erred in adopting a compartmentalised approach, which had seen Mr Landsman liable for unconscionable receipt of a £170,000 bribe which had come out of the €100 million but not liable in dishonest assistance concerning the very same sum.

19. The Court of Appeal
    • Was satisfied that Mr Landsman must have had bind-eye knowledge that the €100 million was not beneficially owned by Larn and that the money was not at Larn's free disposal. He was therefore liable to the claimants.

The meticulous approach of the Court of Appeal requires careful consideration for anyone considering bringing a dishonest assistance claim.

Source

https://www.39essex.com/information-hub/insight/proper-test-liability-dishonest-assistance-breach-trust-and-fiduciary-duty

Source:

• 1MDB liquidators sue Amicorp Group & CEO Toine Knipping in BVI for .... https://www.offshorealert.com/1mdb-liquidators-sue-amicorp-group-ceo-toine-knipping-in-bvi-for-dishonest-assistance-to-7b-fraud/
• https://bing.com/search?q=BVI+AMICORP+DISHONET+ASSITAMNCE+CHARGES
• micorp Mauritius Limited. https://www.amicorp.com//