An analysis of banks' liability for the deposits of proceeds of criminal activities in the UK

Abstract

Money laundering is a menace to society. Illegal funds from criminal activities are often laundered through the banking system in order to disguise their illegitimate origins. To the victims of crime, a bank will seem the most promising defendant from whom the money can be recovered. This paper therefore examines how a bank, which has accepted funds from illegal sources, can incur liability; how such funds can be identified and recovered from the bank; and the effectiveness of the defence of ‘change of position’ as a bar to claims against the bank. It concludes that banks must be protected in the security of their receipts if the sanctity of the financial services industry is to be upheld.