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New forfeiture order powers used to recoup £500,000 from Moldovan student

The National Crime Agency (NCA) has secured a forfeiture order amounting to nearly £500,000 on frozen bank accounts belonging to the son of Moldova's former prime minister, in one of the first uses of new powers.11 Feb 2019

A City of London magistrates court granted forfeiture orders on three frozen accounts, requiring £466,321.72 to be forfeited, after the judge said he was satisfied that the cash was derived from criminal conduct by former Moldovan leader Vladimir Filat.

The NCA carried out an investigation into the finances of Filat's son Vlad Luca and freezing orders for three HSBC accounts were granted in May 2018 under new provisions introduced by the Criminal Finances Act 2017.

Vlad Luca Filat had no registered income in the UK and records showed his accounts and living expenses were funded by large deposits from overseas companies, mainly based in Turkey and the Cayman Islands. He lived an extravagant lifestyle after moving to London in 2016, living in a Knightsbridge apartment and buying a £200,000 Bentley.

Corporate crime expert David Hamilton of Pinsent Masons, the law firm behind Out-Law.com, said the introduction of account freezing orders and account forfeiture orders were an important development when the Criminal Finances Act was introduced.

"Prior to 31 January 2018, when account freezing and account forfeiture orders became available, law enforcement agencies had two routes under Part 5 of the Proceeds of Crime Act 2002 (POCA) to obtain suspected dirty assets: civil recovery in the High Court; and forfeiture of cash over £1,000 where there reasonable grounds for suspecting that it is, or represents, proceeds of crime or is intended to be used in unlawful conduct," he said.

"This has presented difficulties for authorities as those involved in criminal activity often do not deal in cash. The introduction of account freezing orders and account forfeiture orders was designed to address this," Hamilton said.

"If an enforcement officer has reasonable grounds to suspect that funds held in an account are either obtained through unlawful conduct, or intended for use in unlawful conduct, they can apply to the magistrates' court for an account freezing order, which can last up to two years. Mirroring the existing seizure and forfeiture provisions under POCA, the account in question must contain a minimum of £1,000," Hamilton added.

Hamilton said Filat was given an opportunity to contest the forfeiture process and argue that the money was not in fact the proceeds of crime. The regime reverses the burden of proof, compelling the subject to demonstrate that the funds are clean rather than requiring the authority to demonstrate that they are dirty.

However if the process is not contested the authority can return to court to obtain an account forfeiture order which, if granted, means the account holder must forfeit the contents of the account.

"According to the government's recent update to the UK's Anti-Corruption Strategy 2017-2022, the orders have proved to be pretty effective tools, with over £22 million frozen in the past year," Hamilton said.

He said it was notable that the forfeiture order against Filat followed soon after the first unexplained wealth order (UWO) was upheld by the High Court last year against the wife of Jahangir Hajiyev, a former banker imprisoned for fraud and embezzlement in Azerbaijan.

"With Vlad Luca's case coming swiftly after the high-profile UWO against Zamira Hajiyeva, it is clear that the authorities are making good use of their new powers. This will undoubtedly continue," Hamilton said.