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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding Anti-Money Laundering Investigations: The Blameless Steel Case

Author: Azizur Rahman  2 June 2014
4 min read

A spate of cases involving allegations of money laundering and steel trading have brought the legal spotlight onto scrap metal dealers. Rahman Ravelli has successfully defended a number of clients in such cases. In this article, Aziz Rahman considers the challenges that such cases pose to a defence team.

There is the general assumption that when times are tight people become a little more desperate. For many, they have to tighten their belts, make a few economies and forego a few of the nicer things in life because they cost that little bit too much. When the money coming in isn’t enough to cover the outgoings, action has to be taken to rebalance the situation. It is the same in business as it is with the family finances.

That seems to have been the thinking behind a number of operations that saw the authorities take an especially close look at scrap metal yards in South Yorkshire. The idea that Sheffield, known for years as Steel City, may be suffering hard times was the prompt for a number of agencies to examine the business dealings of a number of metal dealers in and around the city. They clearly believed that tough economic times may have pushed such dealers into illegal activity. As a result, the authorities started looking for evidence of everything from the receiving of stolen copper through to the mis-selling of what were claimed to be high-grade metals and, most seriously, the use of the businesses for money laundering.

Either of the first two allegations would be devastating for any metal dealer looking to stay afloat in difficult financial times. Gaining a reputation for receiving stolen goods can only invite trouble. Being accused of selling goods that are not what you claim they are can be disastrous if you are looking to keep trading. But the money laundering allegation is in a different league to the other two. And whatever your line of business it could be enough to consign your company to the scrapheap.

In the cases we handled, none of our clients ended up being convicted. As I shall explain, there are a number of reasons for this; most notably our ability to mount a strong defence case from the very start. But the serious nature of money laundering allegations makes it imperative that anyone facing them has to fully understand the gravity of the situation – and know who they can turn to for the right legal representation.

As its name implies, money laundering is the cleaning of money – hiding its origins so no one can trace it back to criminal activity. Money laundering can be relatively simple or can involve the use of intricate, complicated arrangements that use any number of individuals, companies and banking arrangements in a number of countries.  The laundering can be either self-laundering – where a person launders their own criminal proceeds – or where someone launders somebody else’s money for them. The Proceeds of Crime Act 2002 (POCA) specifies three offences of money laundering. Each is punishable by up to 14 years’ imprisonment. Section 327 of POCA makes it an offence to conceal, disguise, convert or transfer criminal property or remove it from the jurisdiction - the section most relevant to self-laundering cases. S.328 makes it an offence to enter into (or become concerned in an arrangement to) facilitate the acquisition, retention, use or control of property by or on behalf of another person, knowing or suspecting that the property is criminal property. This is where someone launders another person’s money. Under S.329, it is an offence to acquire, use or have possession of criminal property.

Under POCA, a person can make an “authorised disclosure’’ to the authorities, explaining what they know about the origins of money they currently possess. This gives banks and other institutions an opportunity to alert the authorities, thus protecting themselves from prosecution. Such a legal opportunity, however, has to be seen as a responsibility rather than simply a chance to escape prosecution. People in such a situation have to raise any suspicions they may have about the person’s assets that they are handling. Not doing this can make them liable to prosecution. In such cases – and as with some of the steel allegations we were involved in – prosecutors are looking to construct a case that proves beyond reasonable doubt that the person they are accusing of money laundering knew or suspected that what they were handling were the proceeds of crime.

This can often mean that the prosecution puts together legal argument and evidence that can initially look to be very persuasive. They will often tell anyone they are looking to charge with money laundering that they have all the evidence and information they need and that their case is a strong one. It is a tactic that may well work for them on occasions. But if the person charged – or about to be charged – appoints the right defence lawyer they can soon find that the prosecution’s supposed watertight case may be leakier than they thought. For example, prosecutors are often relying on large amounts of circumstantial evidence. Taken as a whole, this evidence can look convincing. But the shrewd defence solicitor can question it, discredit it or even challenge its use before the case goes to trial.

The aim of the defence solicitor is to prove that their clients did not or could not know or suspect that the assets they were handling had criminal origins. Prosecutors will not succeed merely by being able to show that the defendant was uneasy about the origin of the assets they were handling and a jury is not allowed to infer things from, or speculate on, circumstantial evidence. With this in mind, any defence team faced with such a case has to make it their number one priority to be able to challenge and discredit anything implied by the prosecution. They must do this while also presenting a robust, pro-active case that sees the defence making the running rather than simply trying to adapt to the prosecution’s approach.

Any defence case has to address the issue of whether the assets were the direct or indirect proceeds of criminal activity and whether the defendant knew or suspected this.  This can be where the perceptive use of experts can come into play. Auditors, administrators or forensic accountants can be used to explain to the court, with some authority, the legitimate reasons why the defendant had a cash flow or pattern of business that the authorities deemed to be suspicious. Such witnesses have the expertise and experience often necessary to help unpick and dismiss prosecution claims in court. Before then, the perceptive defence team will be making sure it gains full disclosure of all relevant information. It is one way to make prosecution claims appear more speculative than factual, which is vital when looking to cast doubt on a prosecution case.

In our steel cases, we challenged the evidence, scrutinised every argument and assumption the prosecution were making and were able to see the allegations dismissed. It is an approach that can go a long way towards showing that the prosecution does not have a cast iron case.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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