Monday, January 21, 2019


A UK High Court ruling* reportedly handed down today, against one of the world's most widely used databases of high-risk individuals and entities, for listing an NGO and its leader as terrorists, without making an independent investigation, should be required reading for compliance officers concerned about terrorist financing. If you close an account, based upon what is later determined to be incorrect, stale, or simply erroneous data, there may be consequences for your bank, including reputation damage, or a civil suit from your customer.

 Middle East media is stating that the penalty, removal of the "Terrorist"  designation, plus a £10,000 payment, and attorney's fees and costs, is the result of the database error, which consisted of solely relying upon a single source, which was possibly not objective, and may have had a hidden or political agenda.

I may personally agree with the "Terrorist" designation, on the facts of this specific case, but the Court was eminently correct to require that the database provider made an independent inquiry prior to classifying the individual, and his NGO, as terrorists. There must be a factual basis for the designation, if it is to be accurate, especially where such a potentially damning designation is being made.

There have been a multitude of complaints in recent years, about the truth and accuracy of information contained in commercial off-the-shelf databases of high-risk individuals and entities, and some have resulted in civil litigation. In fact, the attorney for the plaintiff in the above case has publicly stated that he has approximately twenty other claimants, similarly situated, who he expects will either obtain a correction in the database, or also file a lawsuit.

Databases are only as good as the compliance officer using them; it is, as President Reagan once wisely said, "Trust, but verify." Make sure information concerning clients is reliable, before acting upon it.
*Majed al-Zeer claim against Thomson Reuters Limited (World-Check). A prior lawsuit, on similar facts, involved Finsbury Park Mosque, with the same results.

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