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Money Launderers, Corrupt Officials Now Avoid UK Offshore Jurisdictions: NCA Official

By Koos Couvée

A U.K. clampdown on suspiciously obtained wealth has seen the British overseas territories and Crown dependencies decline in popularity as a destination for criminals to form shell companies and acquire luxury residences in London, a senior investigator said Friday.

Donald Toon, economic crime chief for the U.K. National Crime Agency, or NCA, told a press briefing in London that criminals have become aware that British investigators now stand a reasonable chance of obtaining “clear, unambiguous” ownership data from their counterparts in jurisdictions such as Jersey, Bermuda and the British Virgin Islands.

“They [properties] are most commonly held in company structures, often layered company structures—usually overseas in an obvious jurisdiction in the Crown dependencies, overseas territories or elsewhere—and there’s a growing issue of elsewhere,” Toon said.

The British Virgin Islands and Channel Islands still comprise the largest share of NCA investigations into money laundering through legal entities, though Toon said his branch has observed a “clear pattern” in which non-U.K. “small island nations” such as the Cook Islands and Marshall Islands feature more frequently in financial crime.

“The concern is that we see things emerging well beyond the overseas territories,” Toon said. “We’ve seen a list of small island nations … where people are able to register companies and are much more difficult to penetrate.”

Toon attributed some of the shift to an agreement between the United Kingdom and its 17 overseas territories and Crown dependencies that came into force in July of last year. Under the agreement, those jurisdictions must respond within 24 hours to U.K. requests for beneficial ownership data, or within one hour to more time-sensitive inquiries.

As of February 2018, U.K. investigators used the agreement more than 70 times to obtain beneficial ownership data, according to the government.

“As that becomes more known, those who wish to hide their money structure the layers [of ownership of legal entities] beyond the areas where we can get effective cooperation,” Toon said.

Bermuda, the British Virgin Islands and the United Kingdom’s other overseas territories must also make the identity of corporate beneficiaries available to the public by 2020 under a law approved by the U.K. Parliament in May.

The law does not apply to the three Crown dependencies: Jersey, Guernsey and the Isle of Man.

Unexplained wealth orders, or UWOs, have also helped the NCA advance investigations into suspiciously acquired real estate. The new measure, which took force in January, enables the government to seize assets from suspected criminals more easily by placing the burden of proof upon them to show their income is legitimate.

Pressure on U.K. law enforcement to staunch the flow of potentially illicit funds into Great Britain from offshore, and from Russia in particular, has increased as a result of the poisoning of a former Russian spy and his daughter in Salisbury, England, in March. U.K. officials have accused the Kremlin of ordering the assault.

Toon said Friday that the NCA plans to employ UWOs against suspects from Russia and officials from “a range” of other nations, including countries in Africa and Asia.

The NCA in February became the first agency to use the power, targeting £22 million in property tied to an Asian banker. The banker’s wife, known only as “Mrs. A,” has challenged the order in the High Court and a decision on the matter, seen as a test case, is expected later this month.

“Some [suspects] may well walk away but a lot of them will really fight for the assets,” Toon said. “In the past [using other asset-seizure powers], we’ve seen every possible test and challenge and it can take years.”

Toon said the NCA has so far chosen not to apply for a UWO during a separate investigation into £25 million in U.K. property after the owner provided officials “quite good answers on the record” into the origin of his or her income.

Topics : Anti-money laundering
Source: United Kingdom: National Crime Agency
Document Date: September 14, 2018