Knowledge

Guernsey's "no consent" regime creates a unique tension between anti-money laundering compliance and property rights. When a Guernsey institution concludes it has grounds to suspect that funds may represent the proceeds of crime, it must file a Suspicious Activity Report ("SAR") with the Financial Intelligence Unit ("FIU"). Once that suspicion has crystallised, the institution cannot safely proceed with a transaction without FIU consent, because doing so would expose it to potential liability for a principal money-laundering offence. Frequently, consent is not granted.

An indication of "no consent" from the FIU is not a freezing order and does not directly restrain the funds, but in practice, institutions will not process transactions subject to a "no consent" decision until their suspicions have been resolved or the Royal Court determines the position.

Over time, a consistent analytical framework has emerged through cases such as: Liang v RBC Trustees (Guernsey) Limited (Royal Court Judgment 20/2018) ("Liang"); BD Limited v Investec Bank (Channel Islands) Limited [2022] GRC 103 ("BD"); Loero v Credit Suisse Trust Limited [2024] GRC 075 ("Loero"); and L and M and N and Mrs B v Credit Suisse AG, (Guernsey branch) [2023] GRC 026 ("LMNB"). The Court of Appeal’s recent decision in HM Comptroller v Fidelity Management Ltd and Royal Bank of Canada (CI) Ltd [2025] GCA 065 ("Fidelity"), although a civil-forfeiture appeal under repealed legislation, addresses concepts which also arise in "no-consent" cases and therefore forms part of the developing landscape.

Questions of evidence

The starting point most often cited is Liang, in which the Royal Court of Guernsey (the "Court") confirmed that a suspicion that is "more than fanciful" is sufficient, but that a "vague feeling of unease", as per the judgment in R v Da Silva [2007] 1 WLR 303, "would not suffice". Once the institution identifies material underpinning the suspicion, the evidential burden shifts to the customer to show, on the balance of probabilities, that the funds are not the proceeds of crime.

In BD, the Court undertook a detailed backwards analysis of the account history, combining bank statements, trust documents and inferences to track the funds notwithstanding an incomplete evidential picture. The Bailiff accepted that the Plaintiff had discharged the burden even without a fully documented provenance, confirming that the Court will reach a conclusion on provenance on the balance of probabilities by drawing reasonable inferences from partial records, rather than insisting on a fully documented chain.

The judgment in LMNB added two further lines of reasoning that have influenced how these disputes are approached. These can be summarised as follows:

• causal nexus
  This concerns the connection between the alleged unlawful conduct and the particular funds held. Lieutenant Bailiff Hazel Marshall KC reasoned that a suspicion resting only on general background concerns, without any meaningful link to the assets, may not satisfy the Liang threshold - the genuine suspicion must relate to the funds in question.
• attenuation of taint
  Even if antecedent wrongdoing is assumed, the subject funds may no longer bear any taint of criminality if the connection becomes too remote. Factors such as the passage of time, the scale of legitimate business activity, mixing or dilution, and the transformation of value can all attenuate earlier, historic taint. This "other end of the telescope" analysis provided an independent basis for concluding that the funds in LMNB could not properly be characterised as criminal property.

Most recently, in Loero, the Court reaffirmed the approach in BD, declining to treat gaps in the historic documentary chain as fatal and explicitly refusing to draw adverse inferences where records were incomplete.

The Court of Appeal in Fidelity: clarifying suspicion and burden of proof

Although the appeal in Fidelity related to civil forfeiture under the 2007 civil forfeiture legislation (now repealed and replaced) rather than the "no consent" regime, the Court of Appeal’s reasoning intersects directly with aspects of the "no-consent" framework:

• the Court of Appeal rejected the argument that a discrete predicate offence must be identified or particularised for a suspicion to be valid. Reasonable grounds to suspect that the assets represented the proceeds of unlawful conduct were sufficient. This conclusion potentially narrows the scope of LMNB’s causal nexus strand: the absence of a defined underlying offence does not, of itself, defeat the statutory characterisation of property as criminal;
• the Court of Appeal also rejected the proposition that it is conceptually unreasonable to require a person to prove that funds are not criminal property. Once the suspicion threshold is met, the Court of Appeal held that the burden rests on the account holder to establish lawful provenance. This apparently limits LMNB insofar as it treated the difficulty of "proving a negative" as a philosophical objection; and
• importantly, the Court of Appeal did not address the attenuation analysis in LMNB. Nothing in Fidelity contradicts the proposition that any original taint may, in appropriate circumstances, be displaced through remoteness, dilution or transformation of value. That line of reasoning therefore remains part of the established authorities.

The position as it now stands

Read together, the authorities establish a relatively settled model:

• the threshold for suspicion is low, provided the institution can identify the material on which it relied;
• once suspicion is established, the customer must prove lawful provenance on the balance of probabilities;
• Fidelity confirms that no specific predicate offence need be identified;
• LMNB’s attenuation analysis remains available and is unaffected by Fidelity; and
• reconstructed provenance may suffice where the overall narrative is coherent and supported by the evidence.

These principles now form the basis on which "no consent" disputes are determined in Guernsey.

If you would like any further information, please get in touch with your usual Bedell Cristin contact, or one of the contacts listed.