High Court dismisses Dundalk company's attempt to prevent BOI terminating business arrangements

The High Court has dismissed an application by a Dundalk-based money transfer/Bureau de Change business for an injunction preventing Bank of Ireland from terminating their business arrangements.

Blue Diamond Sports Ltd t/a Dundalk Bureau de Change, and a related firm Blue DiamondSports No 2 Ltd claimed Bank of Ireland (BOI) wants to end their banking arrangements and close their accounts because of alleged links between the companies and alleged money laundering.

Blue Diamond which denies any involvement in alleged money laundering said it may have to close if it did not secure the injunction.

In his judgement, Mr Justice Senan Allen said that the injunction application "fell at the first hurdle" and that the company had not made out a strong case that the bank was not entitled to take steps to end their banking relationship.

The Judge also found that the balance of convenience did not favour granting Blue Diamond an injunction. The closure of the business the judge added could be fairly measured and compensated by damages.

Blue Diamond, which operates its businesses from Park Street and Linenhall Street, Dundalk, had banked with BOI for some nine years. In April BOI, without warning, informed BlueDiamond that it wants to end their banking relationship.

The decision to end the relationship came a shortly after Blue Diamond had repaid a loan to BOI.

In its proceedings, Blue Diamond claimed the bank's decision, which means the company won't have access to its payments account systems, is discriminatory, disproportionate, lacks objectivity and is unlawful.

Blue Diamond, which acts as an agent for Moneygram International Ltd, has claimed that If the bank is allowed to end their relationship it will go out of business, with the loss of seven jobs.

In proceedings against the Governor and Company of the Bank of Ireland, Blue Diamond seeks various orders including one preventing BOI from withdrawing its banking services or closing accounts Blue Diamond holds with the bank.

Blue Diamond also sought declarations the decision to withdraw services are unlawful, discriminatory and disproportionate, and is in breach of the EU Regulations on Payment Services.

BOI opposed the action and its counsel Bernard Dunleavy SC told the Court that the bank was entitled to terminate the banking relations based on its suspicions that Blue Diamond may be involved in money laundering activities.

BOI said that explanations given in relation to it by Blue Diamond concerning the suspicious transactions, some of which involve large sums of money, were not satisfactory.

In a preliminary application, Blue Diamond asked the High Court for an injunction compelling BOI to continue to provide it with banking services pending the final outcome of the case.

In his ruling, Mr Justice Allen said the company's case that it was entitled to a warning, followed by an appropriate objective inquiry and a reasoned decision regarding the termination of bank services is irreconcilable with the banks' obligations under the 2010 Money Laundering and Terrorism Financing Act.

That act requires financial institutions to report any transactions it believes are suspicious to the authorities. The Judge said the disclosure by a bank to its customer that there is a suspicion of money laundering might prejudice investigations into said transactions.

The Judge noted that BOI is not making the case that the company has been engaged in money laundering but had reasonable grounds at the time it decided to terminate the banking relationship with Blue Diamond for believing it might have been.

The Judge said he was also taking into account the bank's claim that if an injunction was granted BOI would be obliged to undertake a great deal of compliance work in regards to transactions it is suspicious about.