Dundalk money transfer business loses High Court case against Bank of Ireland

Bank said it was entitled to terminate relations based on suspicions of money laundering activities

In his judgment on Friday, Mr Justice Senan Allen said the injunction application ‘fell at the first hurdle’

In his judgment on Friday, Mr Justice Senan Allen said the injunction application ‘fell at the first hurdle’

 

The High Court has dismissed an application by a Dundalk-based money transfer/bureau de change business for injunctions preventing Bank of Ireland terminating their business arrangements.

Blue Diamond Sports Ltd, trading as Dundalk Bureau de Change, and a related firm, Blue Diamond Sports No 2 Ltd, claimed Bank of Ireland wants to end their banking arrangements and close their accounts because of the bank’s suspicions of links between the companies and money laundering.

Blue Diamond, which denies any such links, had said it may have to close if it did not secure the injunctions.

In his judgment on Friday, Mr Justice Senan Allen said the injunction application “fell at the first hurdle” as the company had not made a strong case that the bank was not entitled to take steps to end their banking relationship.

The balance of convenience did not favour granting injunctions as any closure of the business could be fairly measured and compensated by damages.

Blue Diamond, which operates its businesses from Park Street and Linenhall Street, Dundalk, had banked with Bank of Ireland for some nine years.

It claimed Bank of Ireland had last April, without warning, informed Blue Diamond it wanted to end their banking relationship.

The decision to end the relationship came shortly after Blue Diamond had repaid a loan to Bank of Ireland.

Warning

In its proceedings, Blue Diamond claims the bank’s decision, which means the company won’t have access to its payments account systems, is discriminatory, disproportionate, lacks objectivity and is unlawful.

Blue Diamond, which acts as an agent for Moneygram International Ltd, has claimed, if the bank is allowed to end their relationship, it will go out of business, with the loss of seven jobs.

In its proceedings against Bank of Ireland, Blue Diamond seeks various orders including preventing the bank withdrawing its services or closing accounts Blue Diamond holds with the bank.

Bank of Ireland opposes the action and its counsel Bernard Dunleavy SC said the bank was entitled to terminate the banking relations based on its suspicions Blue Diamond may be involved in money laundering activities.

In his ruling, Mr Justice Allen said the company’s case that it was entitled to a warning, followed by an appropriate objective inquiry and a reasoned decision regarding the termination of bank services is irreconcilable with the banks’ obligations under the 2010 Money Laundering and Terrorism Financing Act.

That act requires financial institutions to report any transactions it believes are suspicious to the authorities.

The disclosure by a bank to its customer there is a suspicion of money laundering might prejudice investigations into said transactions, he said.

The judge noted BOI is not making the case the company has been engaged in money laundering but had reasonable grounds at the time it decided to terminate the banking relationship with Blue Diamond for believing it might have been.

He also took into account the bank’s claim, if injunctions were granted, it would be obliged to undertake a great deal of compliance work in regards to transactions it is suspicious about.