City of London Police seize more than £2 million in cross-border money laundering operation
These provisions are a key tool in law enforcement’s armoury to tackle so-called illicit finance. AFOs were used more than 650 times in 2018/19 to freeze over £110m of suspected illicit funds – and many more since the start of 2020.
The same legislation that introduced the account freezing and forfeiture regime also introduced the better publicised Unexplained Wealth Orders (UWOs), though UWOs have only been used in a handful of high profile cases. Moreover, their use by law enforcement has not been without difficulty. On 8 April the High Court discharged three UWOs following applications by the respondents to those orders, ruling that requirements for making UWOs under the Criminal Finances Act were not met. The National Crime Agency (NCA) has confirmed that it will appeal. See our related blogs.
This Forfeiture Order is said to be the largest ever obtained by the Metropolitan Police and follows on the heels of the SFO’s action this time last year that secured the return of over £1.5m utilising the same powers. The NCA has also been extremely active in using these powers.
It is reported that the investigation found that dozens of front companies were opened in the UK using company service providers, “with the intention of hiding the true origin and destination of the funds.” In addition, false identities were used to obtain business banking facilities with a major bank. These accounts were then used to perform transactions where millions of Euros were laundered from Europe to the UK accounts, and then paid back to Italian accounts – this process to disguise and obscure the original source of funds is known as “layering”.
The Criminal Finances Act 2017 inserted new sections into Part 5 of the Proceeds of Crime Act 2002. This allows for the freezing and subsequent forfeiture of funds held in bank and building society accounts. It is a two stage process.
First, a senior officer or officer authorised by a senior officer can apply to a magistrates’ court for an Account Freezing Order where there are reasonable grounds to suspect that the account contains the proceeds of crime or is intended for use in unlawful conduct. In practice this is a low threshold and such orders are routinely granted. The simplicity of this process is a key to the widespread use of these orders.
Subsequently, having investigated, the law enforcement agency may then apply for a Forfeiture Order. If the magistrates’ court is satisfied that the funds in the account represent the proceeds of crime or are intended for use in unlawful conduct, it will grant a Forfeiture Order. The standard of proof is the balance of probabilities and there is no requirement for a criminal conviction to have been obtained against any party.
This case suggests that, even during the current coronavirus crisis with the police and court system facing unprecedented challenges, “asset denial” enforcement work remains very active.
This is confirmed by the officer in charge of this investigation who said of the success: “This case shows that our officers have the capability, knowledge and ability to identify and disrupt sophisticated money laundering operations. It also shows that the Met will use all the investigative and legislative tools available to us to seize ill-gotten gains, and stop proceeds of crime becoming sources of income and wealth.”
If you have any questions about any of the issues covered in this blog, please contact our team of criminal litigation lawyers.
Jonathan Grimes is a Partner in the criminal litigation team who specialises in serious and complex criminal cases. He represents individuals and organisations in all areas of financial services and business crime as well as health and safety and related areas. He has acted in numerous cases involving allegations of financial wrongdoing and has experience of investigations by SFO, FCA, HMRC, CMA, NCA and the police as well as a number of foreign investigative authorities. He has particular expertise dealing with law enforcement applications that seek to freeze or seize assets, including Account Freezing Orders and other applications made under the Proceeds of Crime Act (POCA). He frequently gives advice on money laundering issues including on the making of suspicious activity reports (SARs).
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