A US multiagency investigation has resulted in civil recovery and asset restraint proceedings being issued against those who have allegedly laundered the proceeds of crime stolen from Hermitage in New York last week.
In 2007 the Moscow offices of Hermitage were raided by Russian tax officials, which preceded a large sophisticated tax fraud on the company (and the Russian taxpayer) to the value of $240 million. Hermitage's lawyer, Sergei Magnitsky, who uncovered the fraud, was later murdered in prison.
Bill Browder of Hermitage has literally moved Heaven and Earth to ensure that the lawyer's death, the fraud, and the political corruption which has covered up both crimes, is constantly in the public arena. Thanks to Bill Browder's unwavering commitment, the US passed the Magnitsky Act 2012 and there have been a series of multi-jurisdictional freezing orders and money laundering investigations worldwide.
The US proceedings concern $24 million of high end Manhattan property. They assert that the monies from the fraud passed through several accounts in Austria, Cyprus, Estonia, Finland, Latvia, Lithuania, Switzerland and Hong Kong, and then through a Cyprus-based property company which eventually purchased the US property.
The US proceedings concern a bare 10% of the stolen monies but will the US authorities' investigations and proceedings stop there?
Surely they must also be investigating the US banks that received the monies from Cyprus, the NY property brokers, the US lawyers, and the accountants involved on both sides of the property transactions? Where were their due diligence and AML compliance procedures?
This raises another aspect of money laundering investigations. Because of the breadth of both US and UK anti-money laundering legislation, anyone involved in or who has advised upon the movement of proceeds of crime can be investigated and face either civil or criminal proceedings.
Civil recovery and asset restraint proceedings are regularly used in the UK by the FCA and the SFO, and will be the focus of the newly created NCA.
We can expect to see more of these types of proceedings used here. They are quick, cheap and, because of the low standard of proof, it is easier for the authorities to mount these proceedings.
If you require advice on any of the issues raised in this article please contact us. We have over thirty years' experience defending money laundering, asset restraint, civil forfeiture, white collar/corporate crime and tax fraud.
Contact us by either completing our online enquiry form or by calling us on 020 7387 2032.
