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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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Lewis Nedas Law ranked in Chambers UK 2017, for both Crime and Financial Crime

chambers logoWe are delighted to announce that once again we have been ranked by Chambers and Partners UK for both Crime and Financial Crime.

The 2017 official rankings have described Lewis Nedas Law as "holding their own and shining through".

Jeffrey Lewis has been singled out for particularly high praise in both areas and described as "hugely experienced, creative and tenacious". 


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Risky Business - US Consider Banning Incentive-Based Pay to Rein in Risk Taking

One of the contributing factors to the financial crisis was the excessive level of risk banks and other financial institutions were willing to take, in order to reap the rewards offered to individuals as part of incentive-based pay packages. However, this could be coming to an end in order to create greater long-term economic stability. Financial industry regulators in the US have now invited comment on a proposal which would implement Section 956 of the Dodd-Frank Act, and also amend compensation structures and bank incentive schemes. But how will this rule work, and will it lead to better-behaved banking?

End of Incentive- Based Pay in Financial Institutions?

The newly proposed rule is actually a revision of a rule put forward in Aprill 2011. The rule was developed by six federal regulatory agencies in the US : the Office of the Comptroller of the Currency, the FDIC, the Federal Reserve Board, the Federal Housing Finance Agency (FHFA), the SEC, and the National Credit Union Administration (NCUA).

The rule implements Section 956 of the Dodd-Frank Act, which requires that federal regulating agencies issue together guidelines -

 (1) prohibiting incentive-based payment arrangements that the Agencies determine encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss;

(2) requiring those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate Federal regulator

Under the Dodd-Frank act, the law will apply to institutions which have $1 billion or more in assets, and are one of the following:

Fannie Mae (Federal National Mortgage Association) 

Freddie Mac (Federal Home Loan Mortgage Corporation)

  • Depository institutions or depository institution holding companies
  • Investment advisers
  • Broker-dealers registered under section 15 of the Securities Exchange Act of 1934
  • Credit unions
  • Any other institution the regulators jointly decide should be caught under the law

Comptroller of the Currency Thomas J. Curry said:

“By requiring proper alignment of compensation incentives with an organisation’s risk appetite, the rule calls on lending officers and other employees to put the interests of their institution above their own, The rule will play an important role in helping safeguard financial institutions against practices that threaten safety and soundness, or could lead to material financial loss for the institution.”

Will the proposed rule be effective?

The incentive-based compensation rule is designed to ensure that those working in the financial sector are not being incentivized to take action that requires a great deal of risk or unnecessary risk. Initially, for banks with assets of $1-$50 billion, incentive schemes will need to be reviewed and adjusted to ensure that pay is not greatly aligned with factors that lead to risk-taking.

Banks with over $50 billion in assets, will feel the biggest strain as executives may have to defer 50 percent of their incentive-based compensation for up to three years. This system is designed to assist executives in considering longer term goals as opposed to making decisions that will affect their short-term finances.

Representatives from come of the largest financial organisations JPMorgan Chase, Citigroup, and Bank of America declined to comment on the proposals. Furthermore, analysts of the industry have doubts about how effective the implementation fo these new rules will be.

Some industry analysts were not too sure about how effective the rule will actually be. Eric Chader, SVP of the business advisory firm The Collingwood Group said:

“This rule has the 'Duh' factor of ATR (Ability to Repay) by requiring corporate boards to 'conduct oversight' of the incentive-based compensation programs for its executives and significant risk-takers,”

“The risk, however, appears to be a pass-through to those executives, who are subject to clawbacks, deferrals, and forfeitures within the plans that had been approved by a compensation committee to begin with. This seems like misplaced accountability to me. Applied across all financial institutions, it probably won't have the effect of shrinking the talent pool for executive positions—there are many other more substantial risks for potential candidates that would do that—like putting executives at the GSEs on the GS scale.”

Taking into account this opinion it seems as if incentive based schemes already benefit from a stringent framework, where those executives in positions with great ability to take risk are subject to stricter rules. However, the proposals may send a message to executives about the appropriateness of risk-taking more generally following the economic downturn.

It will be interesting to see whether the proposals for kerbing incentive-based compensation schemes will have an impact on business in the UK, and also whether US companies operating in the UK will be subject to similar rules internally.

Contact our Financial and White Collar Crime Lawyers in Central London, North London

At Lewis Nedas, we have a specialist team of lawyers who are routinely sought to advise on the rules applicable to banks and bankers in the UK. Our solicitors are highly experienced in assisting both individual and institutional clients that are facing investigations by the FCA on allegations of market manipulation. Our service places the needs of our clients at its core. We will handle every aspect of your dealings with regulatory bodies: our team will advise on how best to facilitate regulatory requirements; we will represent your interests in any negotiation or court appearances, and provide you with practical advice that has been tailored to reflect your circumstances. At Lewis Nedas we have a thorough appreciation of the law and how it applies to those working in financial services. We pride ourselves on being the trusted advisor to many working in this complicated and demanding sphere, where the rules are often difficult to understand. If you are concerned about the law or are perhaps involved with the FCA already, contact our team today

To speak to one of our solicitors, please telephone us on 020 3131 5891 or complete our online enquiry form.

With offices in Camden and Fleet Street, we represent and advise businesses in Central London, West London, North London and across the UK.


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and Awards

legal 500 uk leading firm 2017 chambers leading firm 2017