Behind the scenes – how forensic accountants assisted with the surrender of £4m of laundered money
Milsted Langdon are often asked to work on complex financial cases related to money laundering and fraud – employing their analytical eye to help prosecutors and the courts.
Recently their assistance was called upon by the National Crime Agency (NCA). Back in the midst of the national lockdown they were contacted because of their reputation for having expertise in international asset tracing and anti-money laundering investigations.
They submitted a proposal to help investigate the source and destination of £14 million for the NCA, which it claimed had been acquired by a family member of the Azerbaijani ruling elite.
The NCA suspected the transaction to be a part of the well-known Azerbaijani Laundromat money laundering scheme and suspected Suleyman Javadov and his wife Izzat Khanim Javadova were involved.
The NCA believed that the method by which the funds arrived into this couple’s UK bank accounts was so obscure that it could only have been to avoid detection and was, therefore, money laundering.
However, before proceeding to court the NCA needed to have independent confirmation (or otherwise) of the paths that the money had taken and an opinion as to whether these paths were reflective of normal money transfers.
Despite up to £14 million having been transferred to the couple, much of it had been spent and so the NCA hoped to seize the £6.5 million remaining in the Azerbaijanis’ bank accounts.
The NCA had already been granted Account Freezing Orders in 2018 and 2019 on ten bank accounts held by the Javadovs and so it was Milsted Langdon’s task to provide evidence to the court that would assist the NCA with the seizure of these funds.
Stuck at home with another lockdown looming and the nights drawing in, their team, led by Forensic Director Helen Gregory, set about reviewing bank statements and reams of spreadsheets. Quickly a pattern emerged showing that the funds in the UK originated from Azerbaijan and had been transferred through a complex web of companies.
For example, £50,000 received in the UK, could have been originally £1 million sent from a company masquerading as an Azerbaijan telecommunications company to Estonia or Latvia via at least one other company.
Trying to defend their actions the couple said this money was from their rental property but that would have only accounted for £10 million of the funds leaving them £4 million short.
Milsted Langdon’s investigation had also identified that there was a considerable amount of documentation missing, which meant that even if the Azerbaijanis’ suggestions were accepted, the funds did not flow through to the bank accounts in a pattern similar to how the rent was said to have been paid.
In response, the respondents then claimed that the missing £4 million was the accumulation of rental income prior to the period in question which had been stored in a safe. However, that still didn’t answer questions about the pattern of payments made to various bank accounts.
Thanks to the overwhelming evidence Milsted Langdon presented to the court as independent forensic accountants, alongside a wider investigation, the couple forfeited £4 million.
In a press release, issued by the NCA, its Head of Asset Denial, Andy Lewis, said: “This result is a significant success for the UK – £4 million for the public purse – following the first case seeking forfeiture of funds relating to the so-called Azerbaijan Laundromat.
“It follows a challenging and complex NCA investigation lasting more than two years, which resulted in Javadov agreeing to settle rather than face a court battle.
“Anyone who used the Azerbaijan Laundromat should not rest easy, as your assets in the UK are potentially recoverable.
“Our investigation shows the inherent danger of moving money in this way. If money transfers through a ‘laundromat’ system, we can go after it. We will use all means at our disposal to prevent the UK being attractive for this sort of activity.”
Although this agreement does not amount to an admission or finding of liability or wrongdoing against either or both of the respondents, Milsted Langdon were glad that they could add value to the NCA and court’s investigations.
By auditing the analysis of the bank accounts and by adding a real-world perspective from their other experience within various industries, Milsted Langdon helped their client achieve the result they desired, as part of a taskforce that involved investigators in Denmark, Estonia, Germany, Latvia and Spain.
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