AML: HMRC flexes enforcement muscle to the tune of £7.8 million
The Central Criminal Court made confiscation orders last week against the two final defendants who were convicted of offences following one of the FCA’s largest investigations into unauthorised investment activity.
The FCA’s investigation, known as Operation Cotton, led to eight convictions, custodial sentences totalling 32 years and 9 months, and a total of £2,195,496 to be confiscated from all eight defendants.
His Honour Judge Leonard QC directed that all sums confiscated from the Defendants be paid by way of compensation to the victims of their crimes. The scheme involved total losses of £4.3 million by more than 100 investors.
The eight defendants ran the scheme between July 2008 and November 2011 through three different companies.
Potential investors were targeted by cold-callers who persuaded them to invest in agricultural land which the companies had bought for minimal amounts or in fact did not own at all.
The salesmen were assisted by Dale Walker, a conveyancing solicitor. Walker was convicted of possessing criminal property contrary to section 329 of the Proceeds of Crime Act 2002 for which he was sentenced to 5 ½ years imprisonment, and aiding and abetting the carrying on of a regulated activity without authorisation, for which he was sentenced to 21 months’ imprisonment (with the sentences to run concurrently).
Walker received nearly £900,000 of investor’s money into his solicitors practice accounts. He was described by the Judge in sentencing remarks as having 'deliberately frustrated and delayed the FCA’s investigations’. The Judge said that Mr Walker’s conduct was worse because he was a solicitor.
The Judge ordered that Walker pay £887,408 by way of confiscation order, and in the event he fails to pay, he will serve a further 3 ½ years in default.
Whilst Walker was in essence a sole practitioner, the amount of the order covered the total amount of money that passed through the business from the criminal conduct, rather than just the profit that he personally took.
Walker’s Kent practice was closed by the Solicitors Regulation Authority in February 2014 and he was struck off the roll of solicitors in 2015.
In addition, Walker was disqualified from being a company director for 8 years and was prohibited by the FCA from performing any function in relation to any regulated activity.
This is a clear example of the FCA’s objective of taking action not only against people who commit the criminal offences themselves, but against those who facilitate these offences and assist in laundering the financial proceeds.
Whilst Walker’s conduct, according to the FCA, involved ‘offences… committed dishonestly’, this case is an obvious reminder to all legal professionals to ensure that they have robust anti-money laundering controls in place and that they have a clear understanding of their anti-money laundering obligations.
Money-laundering remains one of the FCA’s cross-sector priorities, as outlined in its Business Plan 2017/18 and there a number of initiatives set out in the plan aimed at cracking down on money laundering activity.
Mark Steward, the FCA’s Executive Director of Enforcement and Market Oversight commented:
“The FCA will continue to pursue those engaged in financial crime, including advisers and other professionals who facilitate misconduct or who launder its proceeds. We will also take action, wherever possible, to address the harm caused by misconduct, including taking action to strip illegal gains from defendants for the benefit of those who have suffered loss as a result.”
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