Banks Trust Orders – a defence to cybercrime

Situated in central London and a stone's throw from central London courts, Saunders Law is well placed to deal with urgent applications where money has been stolen or obtained via fraud, either via cybercrime online or otherwise. If you are affected by any of the issues below or need more broadly to recover large sums of money, ring us on 0203 553 6318 for a free initial consult.

It is becoming increasingly common for businesses and individuals to be targets of cybercrime, especially for small and medium size enterprises (SMEs) who trade online, although cybercrime can affect even global PLCs, and professional firms.

Quite often when money has been stolen or transferred by fraudulent means, it is possible to trace the bank account to which funds were diverted. The difficulty is both that A) the perpetrator likely remains unknown and B) the bank which is in receipt of funds may refuse to provide any details on grounds of confidentiality, and which may be a legitimate barrier to the bank being able to assist.

Regrettably fraudsters can use banks' duty of confidentiality purposefully as a shield to hide behind, and also to buy some time to try and squirrel proceeds away. It may be the banks genuinely need court authority before they can release details of the account or account holder.

The transfer may not necessarily be fraudulent, but could follow as a result of monies being transferred to the wrong person, for example if a bank account number is slightly mistyped.

Fortunately, "Bankers Trust Orders" can assist with tracing and recovery in these situations. They are not handed out lightly by the court, and are subject to various tests below. There is a need to act very promptly as funds may shortly be transferred again.

A Bankers Trust Order does not serve to freeze the bank account however, and so it may be sensible to apply for a freezing injunction, or other types of injunction at the same time.

Bankers Trust Orders are thought by some lawyers to be a type of Norwich Pharmacal Order. Norwich Pharmacal Orders are discussed in a previous article here. However, Bankers Trust Orders are in fact a separate equitable remedy. It may be in certain circumstances that a Bankers Trust Order (BTOs) and a Norwich Pharmacal Order (NPOs) are required at the same time, to deal with different assets. Early advice is sensible, and time is of the essence.

BTOs are sometimes only granted a last resort when there are no other means of identifying the proper defendant or if there is no other way of obtaining information to form a claim. It may be that there are other mechanisms within the court rules, the CPR, that could assist in the alternative, and if there are, BTOs may not be granted.

The court has wide discretion and final say whether to award a BTO, but some key requirements are outlined below. The below is not intended to constitute legal advice, and you should always seek independent legal advice tailored to your situation.

In a BTO, the applicant should try to:

• Show they have lost monies due to a clear case of fraud;
• Show that there is a real prospect that the information sought from the bank may lead to the whereabouts or recovery of assets;
• Target as narrow a body of information as possible, i.e. specific accounts;
• Act as quickly as is practicable (if there is delay, there may be little point applying);
• Provide a promise to pay the bank compensation, if the order is awarded but turns out to be incorrect and which causes the bank loss. (This is mandatory and may also require some proof that the applicant is good for the money);
• Consider including a gagging order preventing the bank from tipping the account holder off;
• The application for a BTO can be made with no notice to the bank necessarily, although in practice it might assist to give the bank notice as they may be more willing to cooperate subject to court order;
• The court may require full and frank disclosure of all the facts by the applicant, whether or not the application is made with notice to the bank, for example, the applicant may have to provide evidence which is adverse to its case;
• If the BTO is sought simply to try and strengthen existing on-going court proceedings, then a BTO application may fail.

If some of the key points above are not provided, or if there are less onerous alternatives to a BTO, the BTO may be declined by the court.

There are other considerations which could impact on feasibility of a BTO, including:

Where the BTO is sought against a bank outside of England or Wales, the court may decline to award it in case it offends against foreign law. There may be other remedies available however.

BTOs require careful handling if the bank is likely to become a party to subsequent litigation, in which case a BTO may risk being held an abuse of process, and early advice is sensible.

If the merits of applying for a BTO appear mixed, or if the financial risks of making the application appear high, it is often sensible for instructed solicitors to seek a barrister's urgent advice.

The courts have wide powers in equity in deciding whether to award a BTO, and if a party has been wronged and has no other choice, the court may well award disclosure, even if the bank refuses.

In summary, Bankers Trust Orders require careful handling, but can be a powerful remedy in cybercrime when large sums of monies are misappropriated, and can help identify the wrongdoer as a sensible first step towards recovery of monies.

If you are affected by any of the issues above, please give us a call on 0203 553 6318 to see how we can help.