Empty threats and how to deal with them

Long before that, in 2007, some blue-blazered US Treasury officials went on a tour of private banks in the City of London to warn them that any dealings with Iranians would incur US displeasure. Their threat – never carried out – was that the US Treasury would invoke its power to ban US business with any British bank it cared to earmark for such punishment by means of its powers under the USA PATRIOT Act 2001. They threatened to do this to banks, oil shippers and brokerage companies if they continued to handle Iranian currency, process letters of credit that involved Iran, have anything to do with Iranian shipping, and generally do business with that republic.

Various private bankers complained to the Financial Services Authority, which has since been split into two distinct successor bodies, the Financial Conduct Authority and the Prudential Regulatory Authority, with the latter overseen by the Bank of England. The FSA, far from rushing to their defence and asking the US Treasury to cease such an unprecedented intrusion into the City’s affairs, cravenly did nothing and indeed would not talk about it. This being what some considered to be a supine dereliction of duty led the FSA to be pilloried by the British press and by Conservative politicians such as Kenneth Clarke, the former justice secretary, before its ignominious abolition.

As Rowan Bosworth-Davies, an ex-policeman who performs compliance “health-checks” for banks, stated at the time, there is a legal remedy for such behaviour, which s21 Theft Act 1968 classifies as blackmail. According to s21(1) a person commits an offence if, with a view to gain for himself or another or with intent to cause loss to another, he makes any unwarranted demand with menaces. The demand is unwarranted unless he makes it in the belief (a) that he has reasonable grounds for making it; and (b) that the use of the menaces is a proper means of reinforcing the demand. Section 21(2) says that it is also immaterial whether the menaces relate to action to be taken by the person who makes the demand.

Courts interpret the word "menace" to mean something much wider than "threat". It covers any warning of any consequence known to be considered unpleasant by the intended victim. Bosworth-Davies concluded that any attempt to coerce British banks into cutting off their business with Iranian banks or other entities was “a menace” to those entities and indeed potentially to the profits of the British banks themselves. The perpetrator of such menacing behaviour faces a custodial sentence of 14 years under the Act, although a non-violent menace is unlikely to warrant that.

Any private banker who receives such visits from such officials in future would be within his rights to offer each of them a cup of tea, excuse himself from the meeting room, and call the police. The average police response time in the UK is officially six minutes but in reality almost double that. Perhaps two cups would be in order.