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FIU loses case before The Court of appeal

The Court of Appeal presided over by its president, the Honourable Francis MacGreggor, has dismissed FIUs application for a stay of execution this week in the case of FIU v Cyber Space Ltd. Justice MacGreggor upheld the judgment of Chief Justice Ntende, who had earlier also dismissed FIUs application for a stay of execution after he ordered FIU to unfreeze the bank account of Cyber Space Ltd, immediately. FIU froze the bank account of Cyber Space Ltd in June 2010 after it received a Suspicious Transaction Report, from BMI Bank. The account, which had a balance of $235,000.00, had remained frozen since, whilst the company mounted a vigorous legal challenge to have FIUs directive to BMI bank to freeze its bank account overturned. After hearing the case, the Chief Justice, delivered his judgment on the 28th September 2012 in which he ordered FIU to defreeze the respondents account in questions However, FIU refuse to comply with the judgment of the Chief Justice and instead filed an appeal against the said judgment to the Seychelles Court of Appeal and a stay of execution before the Supreme Court arguing that if the account is unfrozen the company will remove its funds outside the jurisdiction of Seychelles and if FIU, is ultimately successful on appeal, the appeal would be rendered nugatory. Mr. Frank Elizabeth of victoria Law Firm, who represented Cyber Space Ltd, argued otherwise. He submitted to the court that his client has been deprived of their funds since June 2010 and any prolongation of the freezing directive would cause serious prejudice and injustice to his client. The Chief Justice seemingly agreed with Mr. Elizabeths arguments and on the 22nd October 2012 ruled that However when I considered the history of this case and the long period of freezing prior to the commencement of this action by applicant, June 2010 to February 2012, 20 months, a period far in excess of the six months now allowed by the Anti-Money Laundering Act as amended by Act 24 of 2011, together with the fact that the respondent is an international company registered in Seychelles, and therefore amenable to the jurisdiction of this court, the balance of convenience tips in favour of not granting the stay of execution, as in effect it would be a perpetration of the continuation of freezing the respondents assets for a period much longer than anticipated in law without an order of court. FIU was clearly not happy with the Chief Justices decision and immediately filed another application for stay of execution but this time in the Seychelles Court of Appeal where they argued that their appeal has strong chances of success and therefore a stay ought to be granted. On the 13th November 2012, Justice MacGregor ruled that he was not persuaded of their strength of success against the Supreme court ruling of September 2012 which prima facie appears credible. He accordingly dismissed FIUs application with costs. When contacted by LNSW for his comments, Mr. Frank Elizabeth had this to say: This is the second time this year that my clients have successfully challenged the decision of FIU to freeze their bank accounts. It is also the second time that the Court of Appeal has criticized FIUs action. On 21st June 2012 in the case of FIU v Mares Corp Ltd, Justice Fernando said that It is unthinkable that a law could have given such draconian powers to the FIU to freeze moneys of persons for an indefinite period, which certainly affects the constitutionally protected rights of persons to property. I must state that the Anti-Money Laundering (Amendment) Act 18 of 2008 is a very poorly drafted piece of legislation. Justice MacGreggor has now expressed a similar sentiment when he said that There is also the view that the legislation is not properly, effectively and responsibly used, some would argue those laws are verbiose, complicated, revolutionary, draconian, not understood enough, and not tested enough. Time and practice will tell. I think it is time for the Government to conduct a comprehensive review of all the laws that govern offshore banking and the offshore jurisdiction as a whole as they are susceptible to abuse. And this is not good for the offshore sector which generates substantial revenue for the country.