UK’s new ‘freeze and seize’ powers upheld in Moldovan money laundering case
UK Account Freezing Orders [AFOs] v Unexplained Wealth Orders [UWOs] & a case study about Moldovan money laundering
AS AT NOVEMEBER 2019, THE UK (NCA) HAS FROZEN/SEIZED THROUGH
1. UWO = 15 Unexplained Wealth Orders in four cases, against £115.2 million ($148 million) worth of assets.
a. two of which relate to Politically Exposed Persons and
b. two to serious and organised criminals,
2. AFO = Account Freezing Orders in suspected corruption cases against
a. a total of 106 bank accounts
b. worth £124 million ($160 million).
AFOs v UWOs
3. AFOs only apply to cash in bank accounts.
a. READ MORE = https://www.macfarlanes.com/what-we-think/in-depth/2019/everybody-freeze-account-freezing-orders-under-the-proceeds-of-crime-act/
4. UWOs can be used to go after property and other assets such as yachts and jewelry.
5. But, unlike AFOs, UWOs are not the quick win, and As an investigative tool, they can get assets frozen but the long journey to confiscate the assets is a separate process.
Why Account Freezing and Forfeiture Orders are just so attractive
6. Account Freezing and Forfeiture Orders (AFOs) allow law enforcement to freeze and seize cash in bank accounts if, on the balance of probabilities, the money came from or could be used for unlawful conduct. They can be heard in Magistrates courts – the lowest courts in the UK.
7. Having obtained an order from a court, law enforcement can then serve a notice that they will seize (or forfeit) the money in the account unless any objection is received.
8. Law enforcement only need revert to the court to get a Forfeiture Order if there is an objection or they can apply directly to the Magistrate’s court for a Forfeiture Order, as in Filat’s case.
9. Those subject to either order have an automatic right of appeal to the Crown Court.
AFOs = Moldovan money laundering
10. A Crown Court judicial panel upheld the use of an Account Forfeiture Order by the UK’s National Crime Agency in a money laundering case – paving the way for much greater use of these orders.
11. On November 8, the judicial panel dismissed the first ever appeal of an Account Forfeiture Order brought by the son of former Moldovan Prime Minister, Vlad Luca Filat, in a case that shines a light on the increasingly complex ways that money is laundered into the UK.
a. READ MORE = https://www.pinsentmasons.com/out-law/news/forfeiture-order-recoup-from-moldovan-student
12. Vlad Luca’s father is serving X9 years in a Moldovan jail for his role in the theft of $1 billion from the central bank of Moldova – one of Europe’s poorest countries – in 2014.
13. In February 2019, the NCA successfully applied for Filat Jr. to hand over nearly £500,000 ($644,000) frozen from three HSBC bank accounts.
14. The NCA found that Filat, who had no independent income, received multiple cash payments to these accounts through hawala – an informal banking transfer system.
15. Filat tried to claim unsuccessfully that these payments, from Iraq, Turkey and the Cayman Islands, including $5.5 million in cash loans from an Iraqi company, were gifts from friends.
16. Filat, it emerged from the order, was living a life of luxury including
a. spending nearly £200,00 ($257,000) on a Bentley car,
b. paying £400,000 ($515,000) up front to rent in one of London’s most expensive streets, and
c. buying a £50,000 ($64,000) necklace.
17. In his February 2019 judgement in the Filat case, the district judge relied heavily on Filat’s inadequate explanation for why the money was in his account. He noted that
a. “if a transaction looks like money laundering and a respondent should be in a position to explain it, but does not do so, then it probably is money laundering.”
18. Now that his judgement has been upheld by a trio of crown court judges, that gives UK law enforcement a lot of leeway to go after corrupt cash.
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