UT-2023-000032 - [2024] UKUT 00265 (TCC)

Turning now to the disputed Tenet investigation, Mr Hancock reviewed Mr Ashraf’s work in relation to four clients. As we have already noted, Mr Hancock’s factual findings were set out in MH1 and Mr Ashraf was broadly content with Mr Hancock’s statements of fact set out in MH1. Where Mr Ashraf parted company with Mr Hancock is in his failure to record his explanations. In his Appeal Letter he explained what he had done in relation to each of these clients. We note that Ms Ford accepted that Mr Ashraf had provided valuable additional material, which ought to have been considered.

As far as Client 1 is concerned, Mr Ashraf disputes Mr Hancock’s note that the case had not been submitted for second line checking and exhibited a document which showed the transaction being referred. On that basis, we find that the transaction was submitted to Tenet for second line checks and the purported finding of fact in the penultimate bullet under the heading “Client 1” in MH1 is not correct. As far as the location of the client at the time of the conversation is concerned, MH1 refers to credit card transactions, but no detail is given about this. Mr Ashraf says that the query about the indications given by the credit card transaction had been satisfactorily resolved with the AST, although he does not say on what basis. He does, however, say that no evidence had been put forward to indicate why the credit card transaction should be a problem. In any event, he had stressed to the client the importance of being in the UK at the time, the suitability letter signed by the client confirms that this was the case and, as far as Mr Ashraf could tell, it looked as if the client was in the UK at the time. The balance of the evidence, such as it is, points towards the client being in the UK at the time (there is certainly no evidence to suggest that they were not) and we find as a fact that the client was in the UK at the time of the conversation with Mr Ashraf. On that basis, we find that there is nothing in the criticisms made by Mr Hancock of Mr Ashraf in relation to his dealings with Client 1.

Turning to Client 2, although the Halifax mortgage application stated that the deposit came from savings, it would seem that, at least in part, some of the funding came from transactions which took the form of repayments of informal loans between family members. Mr Ashraf himself accepted that he could see how in lay terms these transactions could be regarded as gifts. However, in supporting notes sent to Halifax on the day after the mortgage application was sent in, Mr Ashraf explained the sources of the deposit money and these notes make it clear that the loans were not formally arranged and had no repayment terms. Neither the Halifax itself nor its advisers were concerned by these disclosures and the mortgage application was approved. Mr Ashraf does seem to have failed to carry out verification checks on one of the individuals who was a source of funds and he also failed to obtain and review bank statements as required.

Turning to Client 3, it was incorrectly stated in the Barclays mortgage application that the clients were UK permanent residents. However, there is an email from Barclays confirming that they received the visa prior to approval and there is also evidence that the visa information was sent to Clydesdale. So, although the form may have been incorrectly completed, information giving the full picture and correcting the error was sent to Barclays before they approved the mortgage.

Finally, turning to Client 4, it seems to be the case here that the clients had not been UK resident for at least 12 months. Mr Ashraf completed the “front end” of the mortgage application on the basis that they had been UK resident for longer than was the case. However, the mortgage application makes the true position very clear, and Mr Ashraf says that this was how HSBC themselves told him to fill the form in, so that it was not arbitrarily rejected at the first stage. Mr Ashraf’s second error in relation to this client was to certify that they were a first-time buyer, whereas they already owned a buy to let property in France. He was clearly mistaken in his understanding of what a first-time buyer is and seems to have taken no steps to check that. However, our understanding is that no advantage accrued to Mr Ashraf’s clients from being characterised as a first-time buyer and therefore nothing really turns on this point.

The upshot of all this is that the only real failing on Mr Ashraf’s part, once his explanations and additional evidence are considered, was his failure to carry out the required identity checks on all those involved in the Client 2 transaction and not to collect supporting financial data (bank statements) in time. A failure to do this clearly creates some exposure to the risk of financial crime.

Mr Ashraf says, and it is not disputed, that this was his first mortgage application at Tenet including a gifted deposit, but this does not excuse his failure to obtain the required evidence of identity or obtain copy bank statements, so that he could check the money movements behind the original loans.

If the failings summarised at [115] were Mr Ashraf’s only shortcomings, we would have held that the Authority’s Decision was not one which was reasonably open to it. However, this is not the only instance of Mr Ashraf failing to follow proper procedures, nor is his failure to follow due process the only reason why the Authority’s might reasonably be concerned by the idea of authorising the Applicant.