MRC gets more powers: Tougher compliance checks and unexplained wealth orders mean that the authorities have more powers to crack down on economic crime and money laundering. Criminal barrister Mark Cotter KC explains
Gang ringleader Abdullah Alfalasi was recently sentenced to almost 10 years in prison for using a network of couriers to smuggle money from the UK to Dubai, shining a spotlight on how organised crime groups are attempting to circumvent the increasingly stringent measures the UK has in place for tackling economic crime.
It has become increasingly difficult to bank large amounts of cash into UK accounts, thus Alfalasi used dozens of ‘mules’ to syphon over £100m of cash out of the UK between April to November 2019.
Upon arrival in Dubai, the cash was funnelled through a front organisation masquerading as a company that invests in gold. In this way, the cash could be converted into dirhams, cryptocurrencies or gold relatively easily, before being sent back to UK crime groups under the guise of legitimate assets.
The introduction of new criminal and regulatory legislation in the UK means cryptocurrencies, gold or dirhams cannot be bought via a UK front organisation or exchange without compliance checks. Strict legal obligations that banks and exchanges must comply with mandate that they seek verification as to the source of cash deposits.
Should they detect any deposits or cash transactions that appear in any way suspicious, confidential reports must be created and sent to law enforcement agencies. There are an increasing number of legal mechanisms available for law enforcement agencies to pull upon in order to frustrate the conversion of or dealing in criminal assets.
This tighter legal framework and new enforcement powers facilitate the seizing of cash and freezing of bank accounts. Asset owners are fully responsible for providing proof that such assets have been lawfully obtained without any criminal investigation or prosecution being necessary.
Where criminal proceedings are intended, however, then a restraint order may be obtained so that the individual or business cannot move or convert any of their assets until the investigation or proceedings are concluded.
There are of course differences in how nations choose to restrict the use, movement and conversion of criminal assets. It would appear though, in the case of Alfalasi’s operations, the regulatory environment in Dubai was considered less stringent than the UK’s, making it easier to convert cash. As a result of the war in Ukraine, the free world has been quick to take action to sanction Russia and its agents, which has likely impacted how the UK decides to approach attacking criminal assets.
Any interference by the state passing domestic legislation affecting a person’s free enjoyment of their assets must be proportionate to the legitimate aims of law enforcement to comply with the Human Rights Act. International sanctions are approached in a similar way.
However, the continued war in Ukraine has led to nation states like the UK issuing more aggressive sanctions. So, what could have been considered not to be proportionate several months ago is now deemed to be a perfectly acceptable response.