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Relief against mystery fraudsters: the new normal?

13 February 2018

"Online fraud", "cyberattack" and "phishing" are just some of the buzz words making frequent headlines in the news and keeping business owners awake at night.

In a recent decision of the English Commercial Court, CMOC v Persons Unknown [2017] EWHC 3599 (Comm) ("CMOC"), His Honour Judge Waksman QC granted a worldwide freezing order ("WFO") against the assets of the perpetrators of a cyberattack. Some £6.3 million were stolen in a series of fraudulent payment instructions sent to international banks after CMOC's email system was hacked. The catch? The fraudsters are yet to be identified.

A jurisdiction to grant orders against "persons unknown" has been recognised by the Courts of England & Wales for some time, although CMOC is understood to be the first time such an order has been extended to asset freezing and disclosure orders with global reach in the context of fraud proceedings.

The general principles were establish in Bloomsbury Publishing Group Ltd v News Group Newspapers Ltd [2003] EWHC 1205 (Ch), a case concerning the international best-selling Harry Potter books in which the Court restrained unnamed persons from selling an unpublished manuscript to the press. It was held that as long as the description of the persons was "sufficiently certain as to identify both those who are included and those who are not" the relevant legal test will be met.

The Court in CMOC applied this test and was satisfied that the references to those involved in the fraudulent hack were sufficiently clear. In granting the WFO, HHJ Waksman was heavily swayed by the fact that freezing orders can serve as a springboard for ancillary orders in respect of third parties (such as banks). Third party disclosure often reveals crucial information about what has happened to the assets and may ultimately lead to identifying some, or all, of the perpetrators.

The decision is of significance to Guernsey because, although not binding, English authorities are considered highly persuasive. The Guernsey Courts are well used to granting freezing orders and the jurisdiction takes pride in its high standards of probity and robust framework for combatting international financial crime. With the ever-increasing threat posed by sophisticated cybercrime and offshore locations continuing to be targeted by fraudsters, it may only be a matter of time before a similar application needs to be decided in Guernsey.


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