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A tricky problem, you may rightly observe, in a world where an entirely innocent custodian of money can be hauled over the coals by the powers that be, even when acting with the best intentions. What happened here, and how was the problem solved? 
Our client dealt in the trading of lawful high value products of an attractive nature to well off investors. A new customer came along with a substantial order, and deposited the funds for the anticipated transaction. Further checks on the nature of the transaction and its ultimate beneficiary were carried out, and it was concluded that the transaction could not proceed. Ordinarily, a refund to the original account from which the funds had been remitted would serve to close matters. 
However, a number of problems soon became apparent. The customer had been seeking to strike the deal on behalf of a customer of his own that he did not wish to identify. The funds turned out not to have been received from a bank or building society, but from an unusual finance provider known as an electronic money institution (“EMI”). The EMI then notified the customer of a change in its automatic payment systems, and provided fresh account details in his name linked to an unfamiliar Eastern European bank. The EMI then ceased trading, and the customer asked instead for a refund via a UK ex-building society. 
The client was in a dilemma. It had a strict rule only to make refunds to original payment accounts. But it had no hard evidence that its customer was laundering money. And it did not wish to trouble the financial authorities and become entangled in a lengthy and costly process – it only wished to wash its hands of the funds in a legally clean manner as quickly as it could. 
Proceedings for a court declaration were set in hand. The Government Legal Department (formerly the Treasury Solicitor) was invited to participate in determining the fate of the funds. But it declined, the possibility of a windfall payment into government coffers evidently not being of sufficient interest. The customer remained silent. Where was a solution to be found? 
The answer lay in section 63 (1) of the Trustees Act 1925. In particular, the power for trustees holding money belonging to a trust to pay that money into court, subject to court permission. Here, our client was able to explain that: - 
1. A resulting trust had been created when the transaction failed and the funds became stuck in limbo. 
2. The ultimate beneficiary – the customer’s customer – was unknown
3. The client was willing, indeed very willing, to answer any inquiries from the court and to provide an address for service. Indeed, prior to the GLD declining to become involved, it had taken a proactive approach via a comprehensive witness statement covering the entire background in considerable detail. 
The judge was successfully persuaded. The client was allowed to pay the funds into court, and to offset not only its abortive fee for the transaction but also its legal costs. A satisfactory outcome all round. 
Problems of this kind may be few and far between. But they may be time consuming and costly to handle correctly if they do crop up, and it would be unwise to attract unwarranted attention from the powers that be. Fortunately we can help. Contact David Cooper via or on 0121 325 5402. 
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