The FCA – Transformation to Assertive Supervision
Corporate Crime analysis: Will the recent decision of the Luxembourg District Court make it easier for the National Crime Agency (NCA) to recover criminal assets held overseas? Fiona Simpson, partner, and Sameena Munir, both of Kingsley Napley, comment on the landmark ruling that could strengthen international cooperation in the recovery of proceeds of crime.
National Crime Agency v Azam
The District Court of Luxembourg has ruled that the NCA can seize the proceeds of crime hidden by Mr Azam in Luxembourg. This is the first case where a foreign state has recognised and enforced a UK civil recovery order. Details of the case can be found here.
What problems has the NCA experienced up to now?
Serious and organised criminals have become sophisticated in the way in which they hide funds/assets derived from organised crime in different jurisdictions across the world in an attempt to put them beyond the reach of the UK's law enforcement organisations. The NCA is tasked with fighting and cutting serious and organised crime, which includes seizing the proceeds of such crimes. Despite the NCA's mandate, it has previously faced a brick wall when attempting to recover proceeds of crime hidden overseas armed only with a UK civil recovery order. However, this is set to change in light of a recent landmark decision by the District Court of Luxembourg.
What was the case about?
Amir Azam, a British national and convicted international drug trafficker, is currently serving a four year prison sentence in England for drug offences. With the money made from his criminal activities, Mr Azam bought (at least) seven properties in the UK and held substantial funds in UK bank accounts. He also bought a property in Spain and held an estimated £330,000 in bank accounts in Luxembourg.
The NCA sought a civil recovery order under the Proceeds of Crime Act 2002, Pt 5 on the basis that property held by Mr Azam was tainted because it was obtained by unlawful conduct. In two separate judgments in 2014, the High Court in London held that on a balance of probabilities Mr Azam had used the proceeds of his crimes to buy properties held in his name and the names of close family members. Therefore, the High Court granted civil recovery orders against Mr Azam's seven properties in the UK, as well as funds in five bank accounts in the UK and in Luxembourg.
Unlike criminal confiscation, civil recovery is not dependent on a criminal conviction relating specifically to those assets--instead, the High Court can impose the order if it is believed, on the balance of probabilities, that the assets are the proceeds of crime.
What was the decision of the court?
The issue for the District Court of Luxembourg was whether it should recognise and enforce the UK civil recovery order obtained by the NCA over Mr Azam's assets, enabling the NCA to seize the assets hidden in Luxembourg. On 30 April 2015, the court held that the NCA could seize on a civil basis Mr Azam's hidden assets in Luxembourg.
The NCA has now seized over £3.3m worth of Mr Azam's assets, including the assets in Luxembourg.
What impact does the decision have for the NCA?
This is a landmark decision because it is the first time that a foreign state has recognised and enforced a UK civil recovery order. This will have a positive and powerful impact on the NCA's powers of enforcement and, importantly, recovery in relation to cross-border crime. It gives a strong message to serious and organised criminals that they can no longer protect the proceeds of their criminal activity just by keeping them outside the UK.
What should lawyers do next?
Practitioners with clients who are being investigated or prosecuted for criminal offences and who may hold assets overseas, must make their clients aware of the implications of the recent judgment as the NCA's mandate is becoming stronger. The NCA now has real power to seize overseas assets derived from organised and serious crime using civil recovery.
While the recent judgment only applies to assets in Luxembourg, there is a real possibility that other foreign states will follow suit when they are faced with an application to recognise a civil recovery order made by the UK courts and to permit the NCA to enforce such an order against assets in that country.
Interviewed by Nicola Laver. This article first appeared in Lexis PSL.
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