Bank resorted to ‘harshest measure’

The client supplied the requested documentation, including four versions of his source of wealth.

But when asked for his latest tax return or FS3 form for further clarification, he refused to comply.

Licari later explained that he was not simply being difficult but when he asked the bank to explain why it insisted on that particular document, no suitable explanation was forthcoming.

The bank, on the other hand, argued there were “discrepancies” in the documents presented by the client and that was why they needed to confirm the information with the ‘official source’, namely the tax return or FS3.

When the client still refused to supply that document, the bank sent him a letter in February 2022, giving him two months’ notice to seek alternative banking facilities where he could deposit his funds.

The bank was to mail the balance by means of a cheque once his BOV accounts were closed.

Licari filed a complaint before the arbiter who concluded the bank had a valid reason to insist on that document.

However, the arbiter observed that while legal requirements should be satisfied during banks’ due diligence or review exercise, they must also be proportionate and tailored to the particular circumstances of the client.

The banks should not follow a “one-size-fits-all” approach.

The arbiter also recommended that as a “sign of goodwill,” the bank ought to speak to the client and if he understood the reason for the requested information, it would afford him a basic personal account, separate from the accounts in question.

There ought to be a “strong dose of sensitivity” when dealing with elderly customers who found it difficult to adjust to today’s realities, recommended.

But the matter did not end there. the arbiter

Licari pursued a remedy by filing an appeal before the courts, arguing he had not been given a fair hearing and that the arbiter had wrongly assessed the law.

When delivering judgment, the Court of Appeal, presided over by Mr Justice Lawrence Mintoff, turned down the first argument, pointing out that the right to fair hearing fell within the competence of other courts. But the second ground was justified.

The court observed that the tax return was not one of the list of documents attached to the ‘Declaration of Source of Funds.’ The bank had a right to request it, but in this case, it did not explain the need for that clarification.

The client had a right to know the reason, especially if that document contained confidential information.

A bank representative testified that there were discrepancies in the four versions supplied by the client. The judge observed that the matter could have easily been resolved had the bank supplied a better explanation and obtained the necessary clarification through other documents, other than the tax return.

Recent legal changes and procedures had made certain banking regulations complex, observed the court.

The bank ought to have considered that it was dealing with an elderly customer who might not find it easy to understand the current regulatory system. Moreover, Licari was at the time having eyesight problems.

Instead, the bank resorted to “the harshest measure against someone who had been its client for almost 30 years.”

He had cooperated before this incident and had supplied documents requested. He only withheld the tax return.

In light of all considerations, the court ordered the bank to reopen the accounts, allowing Licari one month to produce necessary evidence regarding his source of wealth.

In light of hardship, discomfort, embarrassment and anxiety this whole episode had caused him, the court awarded Licari €500 in moral damages payable by the bank. Lawyers Ryan Falzon and Jonathan Thompson assisted the appellant.

“There ought to be a strong sense of sensitivity when dealing with elderly customers