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New Corporate Offence of Failure to Prevent Facilitation of Tax Evasion

On 30 September 2017 the UK introduced new offences targeting legal and partnership entities that fail to prevent facilitation of criminal tax evasion by persons working for that company or acting on its behalf. The law regarding tax evasion remains unchanged; however, the scope of persons who can fall foul of currently existing rules has been considerably broadened. The burden has been firmly placed on companies and partnerships operating in the UK, even if headquartered overseas, to provide evidence that they have enacted satisfactorily robust procedures to prevent facilitation.

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Recent Global Regulatory Responses to Financial Crime

In the ten years since the 2008 financial crisis, the reaction of global regulatory bodies has been swift to shield consumers and investors from further harm. The most prolific enforcers have been US-based, comprising nearly 80% of the $26 billion worth of fines imposed for market abuse on both US and international entities in equal measure. Over the previous five years, 28 custodial sentences have been handed down in criminal courts worldwide.

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Bitcoin Database to Tackle Fraud

As part of a large-scale crackdown on cryptocurrencies, the European Union is considering a database of Bitcoin owners in Europe under laws designed to fight money laundering and terrorism. The database will be a central hub of information on the individuals who use the online exchanges where Bitcoin is marketed. The proposal follows fears that the anonymity enjoyed by Bitcoin investors is being used to finance criminality and evade taxation. With the total value of all cryptocurrencies in circulation now over $600bn, there is a strong argument for regulation and tighter control.

The decisions were part of a number of amendments to the Fourth Anti Money Laundering Directive. Online exchanges, it was decided, must abide by strict customer identity requirements, and suspicious activity must be reported to the authorities. The amendments included a clause stating that the EU may set up a central database registering users' identities and wallet addresses". The database would be accessible to financial crime fighters such as the National Crime Agency, as well as asset recovery officers.

Bitcoin has often been considered anonymous since users do not have to sign up with their real names. This has made it a favourite of the online black market and is often linked to dark web drug purchases and terrorist financing.

However, the new requirements would make it less possible to hide transactions and may raise privacy fears. Bitcoin’s users are not public, but transactions are, so being able to link transactions to individuals may prove controversial.

The new EU rules are the latest intervention from regulators as money pours into Bitcoin. Its value has reached almost £15,000.

Regulators are also carefully watching initial coin offerings, a crowdfunding mechanism that uses cryptocurrencies, for signs of fraud and cyberattacks, while America's IRS is cracking down on tax avoidances.

What does this mean for Bitcoin Investors?

Whether the regulation of bitcoin will encourage more investors as relatively safe, mainstream currency remains to be seen. As Bitcoin is used on the black market, the lack of privacy may see certain investors re-think their strategy and pull out, causing the bubble to burst for everyone, as people withdraw their funds at the signs of any future wobbles in the market.

Many venture capital firms now directly invest in new cryptocurrencies, and, as can be seen by the offshore banking system, there is a demand for individuals and companies to store money in an investment where it is immune to taxation. For these reasons, there is the argument that the demand for Bitcoin will remain buoyant despite heavy regulation.

ICO Venture Fraud

Another major new hurdle for enforcement agencies today is the wave of ICO venture frauds we see across the globe. Initial Coin Offering (ICO) ventures have been given a hard time recently, as not only is fraud a common occurrence, in the form of companies being set-up for criminal reasons where there is no intention of creating a viable purpose, but also the ventures are often being used by criminals looking to launder money. Currently, a person setting up an ICO venture does not have to reveal their identity. Regulation in this area will certainly address some of these problems, but to what extent regulation will change things remains to be seen. 

The UK is currently well behind other countries in terms of cryptocurrency regulation. In the US, we are seeing individuals face charges for cryptocurrency crimes on a regular basis. The US financial regulator, the Securities and Exchange Commission (SEC) has warned the public over cryptocurrency and initial coin offering investments, where there is substantially less investor protection and greater opportunities for fraud. A new cyber unit has been created within the SEC last September which recently shut down an initial coin offering scam worth over $15 million. This is the first case filed by the cyber unit.

Whether you are an individual bitcoin investor, are launching an ICO venture or considering investing in one, our solicitors can guide you on the right track. We represent individuals under investigation for fraud and are also on hand to offer guidance on compliance and regulation issues for you and your business. Our solicitors are experts in financial crime and fraud cases and have the requisite experience to see you through an investigation – giving you practical and pragmatic advice every step of the way.

Why Lewis Nedas?

We are a boutique law firm with over thirty years’ experience of defending corporate and financial crime and white-collar fraud. We know the mindset of the various prosecution and regulatory agencies and have an excellent record of success when dealing with those bodies.

We bring a fresh approach to legal services in this area because of our solid fraud defence and regulatory background and our no-nonsense approach to delivering practical solutions for our clients. The firm has been a member of the specialist VHCC fraud panel since its inception; this is run by the Government, which ensures the highest levels of practice and expertise by those of our staff upon the panel.

Contact our Financial Crime Solicitors London Today

At Lewis Nedas Law, you can rely on us to deliver a high-quality legal service effectively and efficiently. We have the experience and know-how, without the City of London overheads or steep hourly rates, and work closely with exceptional Counsel as appropriate to ensure you the best outcome possible.

We are aware that legal costs can be a burden, and we are keen to keep our charges to as low a level as can reasonably be achieved, and will always be open about costs. We will guide you as to the most effective ways of enabling us to give you the best service we can, whilst also keeping our fees down. 

This article is intended to be no more than a general guide and does not comprise legal advice. You are strongly advised to take legal advice before making or resisting any application to the Court.

For legal advice and assistance, please contact us today on 02073872032 or complete our online application form.

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Government Takes Action to Tackle Money Laundering &Fraud

As the new Sanctions and Anti-Money Laundering Bill is being scrutinised in the House of Lords, the Home Secretary Amber Rudd has announced a new national economic crime centre to tackle fraud and money laundering schemes. Rudd will also be chairing a new economic crime strategic board to drive action who will agree on strategic priorities and to ensure the right resources are allocated to our law enforcement agencies to tackle economic crime. This is in addition to several other developments brought in to help quash high-level economic crime, curb the exploitation of the vulnerable, and stop criminals profiting from fraud, money laundering and corruption. An anti-corruption strategy which sets out domestic and international anti-corruption priorities and establishes a long-term framework for tackling corruption has also been established. The strategy seeks to reduce threats to national security, create stronger economic opportunities and to promote greater public trust and confidence in our institutions.

The stability of the UK economy and its status as an international financial centre is currently at risk as a result of large-scale money laundering. The government's most recent national risk assessment, shows large-scale money laundering through UK businesses is substantial, and laundering through capital markets is seeing an increase in recent years. Costing each household around £255 a year, and undermining our financial institutions, the government is now determined to stop financial crime in its tracks and gain more control over this highly complex and fast-moving industry.

The Sanctions and Anti-Money Laundering Bill

The Sanctions and Anti-Money Laundering Bill is intended to set out a post-Brexit framework for UK anti-money laundering measures and is a necessary step to put the government in line with international policy as well as being crucial for tackling high-level financial crimes posing a major threat to our institutions. Once ratified, the Act will have significant implications for not only the UK's financial and professional services in terms of regulation but also for anyone conducting business in the UK, substantially increasing the compliance burden on the private sector.

The government ministers will be able to define the scope of preventative obligations such as risk assessments and maintaining registers and records, as well as mechanisms for enforcement. Whether these obligations are extended beyond the private sector will also be debated, as well as whether to introduce sanctions for illegal activity carried out by British citizens abroad. The powers the Act will grant be focussed to combating money laundering and terrorist financing as well as any other threat to the integrity of the international financial system.

Economic Crime Centre

The new national economic crime centre proposed will operate within the National Crime Agency (NCA) and its purpose will be the coordination of the national response to economic crime, backed by intelligence and analytics capabilities with assistance from other government, law enforcement and criminal justice agencies, as well as resources from the private sector.

FCA Watchdog

A new watchdog within the Financial Conduct Authority has also been introduced in December which will strengthen the cause against money laundering in the UK. The Office for Professional Body AML Supervision (OPBAS) will improve standards and communication between law enforcement agencies and supervisors, helping to eliminate potential vulnerabilities caused by several organisations supervising the same sector, it will oversee twenty-two accountancy and legal professional body AML supervisors.

In addition to these developments, the Law Commission is also reviewing the law on confiscation in the Proceeds of Crime Act with the aim of improving the process and enforcement of confiscation orders, and the government will also make reforms to the way suspicious activity is reported and recorded.

The recent changes will without a doubt have consequences that will be felt by organisations and individuals across the board, but the biggest impact will be with the financial institutions who be subject to the new compliance regulations, and additional checks and balances that the new regime will be putting in place.

Even the most experienced, prudent professional or businessperson can unwittingly become a conduit for money laundering, resulting in penalties and prosecution, and may have a profound effect on your liberty, your professional/business reputation, and your financial situation.

Our team of experts can advise you on your existing anti-money laundering policies, can help you and your company set up a system with the latest cutting-edge advice, ensuring you avoid non-compliance penalties and prosecution.

We have a long history of representing individuals facing such proceedings brought by FCA/IMRO/BERR. We advise on compliance on regulatory issues, and if you are under investigation and we also provide strong and reliable representation at Professional tribunals. It is vital that if you are facing such an investigation or if you are concerned that your company's internal safeguards may NOT pass muster, that you instruct lawyers with genuine hands-on experience. Jeffrey Lewis spent years in the City as an investment analyst and counts many City professionals as former colleagues and clients. His knowledge and experience in City institutions is second to none, and he has successfully defended countless investigations over the years, in both regulatory and criminal proceedings.

Why Lewis Nedas Law?

At Lewis Nedas Law, you can rely on us to deliver a high-quality service at a reasonable cost. We are a boutique law firm with over thirty years’ experience of defending corporate and financial crime and white-collar fraud. We have an expert understanding of the industry and the various prosecution and regulatory agencies and have an excellent record of success when representing clients dealing with enforcement agencies.

Contact our Financial Crime Solicitors London Today

Our highly skilled lawyers have the experience and knowledge but without the City of London overheads or steep hourly rates. We work closely with exceptional Counsel where appropriate.

We will guide you as to the most effective ways of enabling us to give you the best service we can, while also keeping our fees down.

This article is intended to be no more than a general guide and does not comprise legal advice. You are strongly advised to take legal advice before making or resisting any application to the Court.

For high-quality legal advice and assistance on money laundering matters, contact us today on 02073872032 or complete our online contact form.

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Tesco Scandal - Allegations of Fraud and False Accounting

Back in 2014, the Serious Fraud Office (SFO) commenced a criminal investigation into accounting practices at Tesco in respect of an estimated £326 million missing from the supermarket group’s accounts. Although the investigation is still underway, the SFO has decided to prosecute three former executives in respect of their roles in the scandal. Last week, their trial date was set for next September, when they will each face charges of fraud by abuse of position and false accounting.

In this blog post, we take a look at these two offences and our approach to defending against allegations of serious financial misconduct. At Lewis Nedas Law, our solicitors have been successfully defending clients against allegations of fraud and other financial crimes for over 30 years. We are particularly well-known and respected for our work helping individuals and companies deal with regulatory and criminal business investigations, such as those conducted by the SFO. Our aim is to take action early on, to help mitigate the consequences. For more information on how we may be able to assist you, please contact us.

Fraud by abuse of position

The offence of fraud by abuse of position is one of three classes found in the Fraud Act 2006 (the other two offences being fraud by failing to disclose information (section 3) and fraud by false representation (section 2)). Although it shares some elements with the other two offences, such as the need for dishonesty and an intention to make a gain or inflict a loss, it is a distinct offence that is committed where someone:

  • • occupies a position in which they’re expected to safeguard another’s financial interests, or at least not act against those interests, such as a director in respect of a company or a trustee in respect of a beneficiary;
  • • dishonestly abuses that position, either by act or omission, by failing to safeguard another’s financial interests; and,
  • • intends, by means of that abuse, to: make a gain for themselves or another; or, cause loss or expose another to a risk of loss. This final element, i.e. there being no need for actual loss or gain and the risk being sufficient, is common across all fraud offences.

Because ‘abuse’ is not legally defined in the act, it can cover a wide range of acts or omissions. Further, there is no need for an individual to know that they are in a position where they’re expected to safeguard another’s financial interests – a conviction is highly likely to follow if the prosecution can prove that abuse was dishonest and there was an intention to make a personal gain or cause another loss. If an accused is convicted of fraud by abuse of position, the maximum penalty is imprisonment not exceeding ten years, an unlimited fine or both.

False accounting

The offence of false accounting is found in section 17 of the Theft Act 1968. It is committed where someone:

  • • dishonestly, coupled with a view to gain or with intent to cause another loss;
  • • destroys, defaces, conceals or falsifies any account, record or document made or required for an accounting purpose; or,
  • • furnishes information that produces or makes use of any account, record or document which, to their knowledge, is or may be misleading, false or deceptive.

This offence also covers a wide range of scenarios, including both the act of making a false entry and the omission of material particulars (where the omission may have the effect of significantly misleading), as well as covering someone who does not actually make a false entry or material omission but only concurs with the false entry or material omission. Further, a company will be guilty of the offence if it is committed by an officer of the company whose conduct can be attributed to the company.

Although the act doesn’t shed any light on the required degree of knowledge an accused must have in order to be guilty of the offence, the courts have clarified that the accused must have acted deliberately in making or concurring with a false account, i.e. they knew the account to be false or capable of being misleading. As such, the prosecution does not need to prove that there was an intention for any specific person to be misled. If an accused is convicted of false accounting, the maximum penalty is imprisonment not exceeding seven years.

Our approach to serious fraud defence

Our partner-led Serious Fraud team has vast experience defending complex fraud cases, many with a large international dimension. We employ our experience of working across jurisdictions in all cases being investigated by the SFO. Our multifaceted approach of involving specialist professionals to assist our client’s marks our Serious Fraud team out as a distinctive and progressive law firm that takes special care to protect our clients’ interests. We structure our approach to SFO investigations and prosecutions in a way that insulates our client’s from the majority of the administrative and logistical issues, allowing them to concentrate on working directly with our specialist solicitors to formulate a strategy to deal with the investigation. Find more information on SFO investigation and prosecution defence, and the approach of our pragmatic, practical and effective team here.

Lewis Nedas Law – Specialist Fraud Defence Solicitors London

Lewis Nedas Law have over 30 years’ experience successfully defending clients against fraud prosecutions. We are ranked in Chambers and the Legal 500 for the high quality of our fraud work. Our fraud solicitors are described as 'precise', 'steely determined' and 'always mindful of securing the best outcome for our clients'. Our specialist financial crime & fraud solicitors in the heart of London have extensive experience of preparing successful defences to fraud prosecutions including corporate fraud, whether these are brought by the Crown or a statutory body such as the FCA or the Department of Business innovation and Skills. Please contact Jeffrey Lewis or Siobhain Egan on 020 7387 2032 or contact us online.

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legal 500 uk leading firm 2017 chambers leading firm 2017