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Operation Rize
Operation Rize was a highly publicised operation led by the Metropolitan Police Service's (MPS) Economic and Specialist Crime Command. On 2-3 June 2008, three company directors of a safe depositary business were arrested in conjunction with Section 352, Proceeds of Crime Act 2002 (POCA) 'Search & Seizure' Warrants being executed on three safe depositaries in London.
It took the MPS eleven days to force open over 6,700 safety deposit boxes and over 3,500 boxes were found to contain in excess of £53 million in cash, false passports, credit cards and cheque books, drugs, gold, works of art, jewellery, documentation relating to fraudulent activities and other items linked to crime. The cash was removed and seized by the MPS under Section 294 of POCA, on the basis that there were reasonable grounds for suspecting that it was derived from, or to be used in, 'unlawful conduct'.
The MPS has subsequently made arrests for offences including money laundering, paedophilia, concealing criminal property, benefit fraud, burglary, drug supply, possession of firearms, fraud and the illegal importation of elephant tusks.
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Is Operation Rize a proportionate use of POCA?
Concerns have been continually expressed about the MPS being able to obtain warrants allowing them to search each and every safety deposit box. Moreover, the MPS has been accused of 'judge shopping'. Having had its initial application refused by a judge in Southwark Crown Court the MPS later applied to Croydon Crown Court and is alleged to have over-stated its case by claiming that nine out of ten box-holders were probably criminally minded or felons. Whilst a number of investigations are pending, it looks like only 10% (approx) of the box-holders are being probed for villainy.
Unsurprisingly, the MPS has defended its actions and the unprecedented use of POCA. Following the conviction of the three company directors for Operation Rize related offences in March 2011, Detective Superintendent Mark Ponting from the MPS said:
"Rize was an innovative money laundering investigation targeting those who offered a service to organised crime, and in so doing has taken the proceeds of crime away from criminals and put cash back into the public purse. Already around £13 million has been returned to public coffers, with many more investigations outstanding. More than £12 million remains held within the courts and around 900 investigations have been referred to Her Majesty's Revenue and Customs (HMRC). These cases are likely, in their own right, to recover further millions of pounds back in to the public purse."
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Why might a box holder be referred to HM Revenue & Customs (HMRC)?
Our direct involvement with Operation Rize cases suggests that the MPS has agreed information protocols with HMRC to identify people who can be referred to HMRC for further investigation. The MPS is leading the investigation with the full assistance of HMRC and HMRC appears to have supplied the MPS with information regarding declarations of income made by box holders. HMRC seems content to wait in the background and review its own tax compliance records to establish if the box holders have previously been subject of a tax investigation and, if they have, whether the contents of the box were disclosed on any certified statements of assets, tax returns etc. Where the MPS investigation identifies no wider criminality than tax related issues the matter is passed to HMRC to investigate. However, convincing the MPS that a box holder has only tax related issues is not an easy task and expert specialist advice is invaluable.
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If you have had cash seized do you need to ask for the monies to be paid to HMRC on account of unpaid tax?
The MPS has previously suggested that box holders with tax related issues have requested that cash seized in Operation Rize be paid directly to HMRC to cover unpaid tax. This isn't perhaps the whole story! Whilst we agree that the MPS is not typically making cash forfeiture applications under Section 298 of POCA in solely tax related cases, it is actually asking box holders concerned to sign a mandate authorising the transfer of seized cash to HMRC. The mandate also includes a statement to confirm that the box holder will not pursue any litigation against the MPS in respect of the cash seized. Box holders should take specialist advice before agreeing any such requests.
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What lies in store after a referral to HMRC?
Box holders will be understandably concerned that their referral to HMRC will be a case of 'out of the frying pan into the fire'. Historically, HMRC's prosecution policy has been to consider each case on its individual merits, which would mean that there is no guarantee of immunity from prosecution for Operation Rize cases even though the MPS has effectively decided not to proceed criminally.
HMRC's stated position is this: -
"What we can say is that we want to ensure we prosecute wherever that is appropriate and wherever it represents value for customers."
That said, in most cases HMRC's policy has been to deal with suspected tax fraud/evasion via its Civil Investigation of Fraud (CIF) procedures, but HMRC has been targeted to increase its tax fraud/evasion prosecutions by five-fold during the course of this Parliament. Therefore, specialist advice should be seriously considered and OneE TDI has a proven track record in securing our clients immunity from prosecution for tax fraud/evasion.
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I am subject of Operation Rize proceedings. What should I do?
If you are subject of Operation Rize proceedings the worst thing you can do is nothing. Specialist advice is essential and OneE TDI can help.
Operation Rize referrals to HMRC are being centrally managed by a multi-functional unit that is using a wide range of civil and criminal investigation powers to investigate cases. OneE TDI has established a working dialogue with that unit and strongly urges any Operation Rize box holders or anyone else with tax issues related to a safety deposit box to seek expert professional advice. A well-handled approach to HMRC will help minimise the risk of potential prosecution (and possibly help secure immunity from prosecution) and mitigate any financial penalties for any tax offences that might have been committed.
OneE TDI has helped successfully defend a number of clients facing cash forfeiture applications. Our biggest success, to date, was assisting a businessman make a successful application for the release of £1 million seized cash by the MPS. We also obtained immunity from prosecution by HMRC for tax related offences linked to the £1 million.
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How can OneE TDI help?
POCA is a draconian piece of legislation. In many cases, it has been properly used and led to criminals losing their 'ill-gotten gains'. However, OneE TDI has acted or been instructed in a number of cases where we have successfully demonstrated that the Prosecution's assertions either had no supporting evidence, were unjust or there would be a serious risk of injustice were the Court to agree them.
At the core of OneE TDI is a highly experienced team specialising in all areas of POCA investigations. Mark Taylor was a Case Director in HMRC's Restraint, Confiscation & Civil Forfeiture Unit and became an Accredited Financial Investigator authorised by the Asset Recovery Agency. He successfully obtained and executed POCA Court Orders and so knows how best to present and defend a case. He is now an associate member of the Proceeds of Crime Lawyers Association (POCLA) and is a recognised expert in this area of law.
We offer confidential, non-judgemental and invaluable advice and have a proven track record both in successfully challenging Prosecution assertions that cash seized was from (or to be used in) crime and defending clients in applications for forfeiture of the cash and applying for the release of seized cash.
Please see the Testimonials kindly provided by our clients (or their accountants or lawyers), which confirm our levels of client service.
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How can I contact OneE TDI?
If you would like a free, no obligation discussion with us please contact either Gary Rowson or Mark Taylor on 0800 652 6156 or complete and submit the online form below:
Whilst we endeavour to provide informative and accurate information, the content on this site is for general information purposes only and should not be taken to constitute tax or legal advice which must always be tailored to individual circumstances. Please contact us if you would like to discuss matters.
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Proceeds of Crime Act (POCA) Investigations