On 29 February 2008 HM Treasury issued advice about the heightened risks of money laundering or terrorist financing in certain jurisdictions. All UK businesses within the financial sector are advised to factor this heightened risk into account and consider applying increased scrutiny and due diligence to transactions associated with these jurisdictions, in line with the FATF recommendations. The Financial Action Task Force (FATF) issued a warning on 28 February 2008 of the higher risks of money laundering and terrorist financing posed by deficiencies in Uzbekistan, Iran, Pakistan, Turkmenistan, Sao Tome and Principe and the northern part of Cyprus.  For further information visit www.hm-treasury.gov.uk

On 13 February 2008 HM Revenue & Customs (HMRC) urged Trust or Company Service Providers (TCSPs) to register their businesses with HMRC by 1 April 2008 under the new Money Laundering Regulations (MLR), which came into force on 15 December 2007. TCSPs need to register with HMRC by the deadline if they want to carry on in business. At the same time, HMRC alerted Accountancy Service Providers (ASPs) that they will be able to register with HMRC from 1 April 2008. Applications received before that date will be held for processing immediately the register opens. ASPs need to apply before 1 July 2008 to give HMRC sufficient time to process their application by the deadline. Businesses that apply late risk not being included on the register when it opens on 1 October 2008. If that happens they will not be able to trade legally until they are included on the register. Under the new MLRs that came into force on 15 December 2007, TCSPs and ASPs have to be supervised by a designated professional body in order to carry on trading. If they are not already supervised by a designated professional body, or for TCSPs the Financial Services Authority, they need to be registered with HMRC.

On 26 February 2008 the Assets Recovery Agency (ARA) was granted a Property Freezing Order over assets with an estimated net value of £202,500 held by a man from Solihull, West Midlands. The case was referred to ARA in April 2007 by West Yorkshire Police. On 5 April 2007 at Leeds Crown Court the defendant was found guilty of two counts of money laundering and sentenced to four years imprisonment. In its civil recovery action the Agency alleged that he had acquired assets, namely three properties in the Birmingham area and money in various bank accounts as a result of his unlawful activities, including money laundering, mortgage fraud and tax evasion.

On 12 February 2008 a man from Newcastle upon Tyne was ordered to repay £100,000 by Newcastle Crown Court for a sophisticated tax fraud. He was also sentenced to nine months imprisonment, suspended for two years and disqualified from being a company director for six years. The court heard how the director of a tile company carried out a number of deceptions which resulted in insufficient Tax, National Insurance and VAT being paid to HM Revenue & Customs between 1999 and 2004. The man took money from the company which he then used to fund his own lifestyle and to pay cash to his employees and sub-contractors engaged to carry out work for the business. He prepared false invoices in an attempt to conceal this action and also failed to record cash received from customers in the records of the business. As an employer, he failed in his obligation to operate Pay as You Earn (PAYE) on all the wages paid to his employees. He paid employees cash top-ups from which no Tax and National Insurance was deducted. He also failed to operate the Construction Industry Scheme on all payments made to sub-contractors. This scheme requires a contractor to deduct tax from payments made to sub-contractors working within the construction industry. He engaged plumbers, electricians and joiners to carry out work for his company and failed to make the correct deductions from the payments he made to them. He was arrested on 11 November 2004 and his home address and business premises were searched by Northumbria Constabulary. The man was charged with five counts of Cheating the Public Revenue Contrary to Common Law and pleaded guilty to all five counts at Newcastle Crown Court on 19 April 2007. The total tax loss to HMRC as a result of his actions is £97,161 plus interest of £2,838. He was ordered to repay £63,382 within 28 days. He must repay the remaining £36,617 within 12 months or face two years in jail. This case was successfully prosecuted by the Revenue & Customs Prosecutions Office (RCPO).


On 11 January 2008 officers from Cleveland Police Economic Crime Unit carried out a search of a public house and recovered over £100,000 contained within a carrier bag in a safe. A man was arrested and released on police bail for money laundering offences. Detective Chief Inspector Rob Donaghy, Head of Serious and Organised Crime said, “This is yet another successful seizure of suspected proceeds of crime. Only last week we recovered around £50,000 from Middlesbrough and £60,000 from the Stockton area. We are determined to hit criminals where it hurts – in their pockets – and show them that crime does not pay. We want those dealing in any form of criminality to be aware we are actively seeking to identify their criminal assets, and we will be applying to the courts to strip them of their illegal wealth.”

On 14 December 2007 at City of Westminster Magistrates’ Court £442,315 in cash was forfeited. The money was discovered during a Middle Market Drugs Partnership (MMDP) operation in June 2007. Officers searched a car and found the cash in the vehicle’s boot. The driver, who was the only occupant, was arrested on suspicion of money laundering and awaiting trial in respect of money laundering offences. The London Regional Asset Recovery Team dealt with the financial investigation in respect of the cash itself. The investigation is ongoing. The MMDP is a pro-active operation set up to combat drugs supply in London and is staffed by Metropolitan Police Specialist Crime detectives and officers from the Serious Organised Crime Agency.

On 29 February 2008 HM Revenue & Customs (North West) searched twelve premises in a dawn operation in relation to suspected VAT offences amounting to over £2 million. Domestic and commercial premises were searched in Altrincham, Blackburn, Bradford, Preston, Leicester and Sheffield. The fraud is believed to involve part of an organised crime syndicate operating a network of companies that traded in quantities of precious metals such as platinum. It is suspected they purchased the goods VAT-free from the European Union before selling them on to businesses in the UK. It is alleged that those involved 'created' false paperwork for the sole purpose of stealing money owed to the public purse through the non-payment of VAT. The trade in precious metals is low volume but high value making it a potentially attractive sector for abuse. It is anticipated that the final fraud figure will in reality be much more than the initial £2 million suspected. The investigation is ongoing.

On 17 January 2008 at Southwark Crown Court a defendant’s benefit was determined at £2,048,796 and he was ordered to pay a Confiscation Order in the sum of £720,636 plus costs of £27,018. He was arrested in East London in April 2006, following an operation by the Metropolitan Police, Clubs and Vice Obscene Publications Unit. He was responsible for operating business registered in the Seychelles and USA that were supplying extreme pornography (DVDs) to customers in the UK and Ireland. Using offshore accounts in Isle of Man, Cyprus, Guernsey and the USA he attempted to conceal his substantial assets. He was charged with the large scale supply of obscene pornography and laundering £2.1 million through his accounts between 2003 and 2006.In addition to the two offshore companies he used two false identities and held numerous accounts through which money was laundered. On the day of his arrest £56,000 in cash was discovered in a drawer in his bedroom. Due to the complexity of his businesses that had been operating since 2000 forensic accounting assistance was sought. In October 2006 he pleaded guilty to the obscene Publication Act offences and 20 counts of laundering the £2.1 million. He was subsequently sentenced to 16 months on each count to run concurrently.

On 31 January 2008 in a series of dawn raids, detectives from the Metropolitan Police's Special Intelligence Section (SIS) raided twelve addresses across London. The raids took place in Tottenham, Peckham, Leytonstone, Palmers Green, Enfield, Holloway and Kidderminster. Operation Greensea, began in 2006 working closely with European partners. During the raids one of the networks disrupted consisted of Turkish nationals suspected of being involved in large-scale human smuggling and class A drug importation (Heroin) and money laundering. The other network disrupted consisted of Chinese nationals believed to be directly involved with the Turkish network and suspected to be involved in human smuggling and money laundering. Both the networks were believed to have syndicate associates in Belgium and France, who have been arrested by a variety of partner European law enforcement agencies in Brussels, Ghent, Paris and Dunkirk. In both the networks, those being smuggled into the UK were mainly Chinese nationals who are believed to have paid up to £21,000 each to be brought to the UK, usually travelling in extremely cramped conditions in lorries, boats and trains from China across Asia and Europe to the UK in a journey that could take up to 18 months, with London as their intended destination. Officers from the Border and Immigration Agency detained those identified as illegal immigrants. This Operation involved close working with European law enforcement agencies including Belgian Police, French Police, Europol and Eurojust. It also involved working closely with UK partner agencies such as the Serious and Organised Crime Agency (SOCA) and Kent Police.

In January 2008 at Manchester Crown Court a Liverpool man was ordered to pay over £500,000 despite absconding at the end of his original smuggling trial and being missing from the subsequent confiscation hearing in Manchester. This is in addition to the cash seized when he was arrested. If he doesn't pay up within six months a further three years will be added to his sentence. HM Revenue & Customs (HMRC) officers originally arrested the defendant at a Manchester warehouse full of counterfeit cigarettes in May 2006. During the operation the officers recovered a total of 3,440,400 cigarettes equating to a duty evasion of £503,502. In addition, the officers found £322,860 in cash bundles from both the warehouse and the man’s home address in Liverpool during a later search. He was arrested at the warehouse using a hired van to transport some of the cigarettes. In the subsequent prosecution brought by the Revenue and Customs Prosecutions Office (RCPO) in March 2007 he pleaded guilty to two charges involving the Excise fraud and money laundering and was found guilty of a further two charges after a trial that concluded in July 2007. He went missing that same July before he was sentenced and a warrant was issued for his immediate arrest by the court. In his absence the Judge sentenced him to three years in jail related to cigarette smuggling and money laundering last year.

Watford Observer online reported that a couple who have been arrested on suspicion of conspiracy to defraud and offences against copyright infringement will also face having their bank accounts frozen whilst Enfield Police’s Money Laundering Team carry out work on confiscating their assets under the Proceeds of Crime Act.

The Visitor, Morecambe online reported that two brothers who deny charges of laundering almost a quarter of a million pounds claimed they believed the money was a legacy from their late father. The mother of the defendants has admitted stealing at least £350,000 from her former employers, a supermarket in Carnforth, via a customer refund scam. The trial is ongoing.

The Southern Regional ‘Payback’ Financial Crime Conference will take place on Wednesday 19 March 2008 at the Park Inn Hotel and Blue Conference Centre, Heathrow, Middlesex. The one day event will cost £95 + VAT for Public Sector delegates and £190 + VAT for Private Sector delegates. Places are limited so please contact conferences@ara.gsi.gov.uk for further information and to request a booking form.

This newsletter is produced on behalf of the assets recovery community of organisations by the Assets Recovery Agency and is distributed by the Government News Network News Distribution Service. If you have items of news for inclusion in a future edition, have suggestions for improvements, would like to be removed from the distribution list or know of anyone who would like to be added to it, please contact poca.update@ara.gsi.gov.uk