NCA Seizes £14m Property in Landmark AML Case

Written by Caroline Walters, Senior AML Consultant, FCS Compliance

In a landmark case that underscores the critical importance of robust Anti-Money Laundering (AML) processes in the UK Real Estate industry, the National Crime Agency (NCA) achieved a significant victory in June 2023. After a lengthy six-year civil recovery investigation, the High Court granted the forfeiture of two high-value properties—a £14 million Knightsbridge house and a prestigious golf club in Ascot—linked to large-scale fraud and money laundering activities by the wife of jailed banker Jahangir Hajiyev. This outcome reflects the UK’s steadfast determination to combat illicit wealth entering the Property Market and serves as a timely reminder for the sector about the risks posed by dirty money. With the NCA using Unexplained Wealth Orders (UWOs) to scrutinise the acquisition of these properties, real estate businesses must remain vigilant and ensure compliance with UK AML regulations to protect themselves from similar risks.

Developments in Fraud and Money Laundering Investigations

The investigation into Jahangir Hajiyev, the former Chairman of the International Bank of Azerbaijan, revealed a complex web of financial activities. Significant sums were laundered through multiple jurisdictions, including Luxembourg and Cyprus, before being used to purchase luxury UK Real Estate. While Hajiyev was serving a 16-year sentence for various financial crimes, the NCA uncovered this intricate network of accounts and shell companies.

Tim Quarrelle, NCA’s Branch Commander for Asset Denial, commented on the case: “NCA officers worked tirelessly to track the complex movement of these funds across the international banking system, through shell companies in multiple jurisdictions, in order to ascertain their source.”

The NCA’s approach highlights the increasing use of UWOs, introduced by the Criminal Finances Act 2017, to investigate the wealth behind UK property purchases when the source of funds is unclear. The application of these orders to the Knightsbridge and Ascot properties in 2018 marked a significant milestone, demonstrating the agency’s commitment to forfeiting properties acquired with ill-gotten gains—even years after the original purchase.

The Real Estate Sector: A High-Risk Target for Criminal Funds

This case underscores the urgent need for stringent customer due diligence and enhanced AML practices within the UK real estate industry. The tangled ownership of these properties, involving offshore companies and trusts, exemplifies the sophisticated methods employed to launder illicit funds into UK assets.

Simon Armstrong, NCA Deputy Director, added: “This fantastic result demonstrates how the NCA will deploy all the powers available to identify, pursue, and recover the proceeds of crime.”

Armstrong’s statement sends a clear message to estate agents and AML professionals alike: the scrutiny of clients, transactions, and sources of wealth is paramount. Neglecting this diligence can lead to severe financial, reputational, and legal repercussions.

Implications for UK AML Compliance

The NCA’s recent success highlights the importance of robust AML compliance measures in the Real Estate sector. Law enforcement agencies are effectively employing tools such as UWOs and property freezing orders to disrupt money laundering activities. For AML compliance professionals in the UK Real Estate sector, this case illustrates the critical need for vigilance. As noted by Quarrelle, the NCA’s commitment to tracing complex financial trails, even across international borders, emphasizes the necessity of ensuring compliance processes are current and capable of withstanding regulatory scrutiny. At FCS Compliance, we specialise in helping businesses navigate the complexities of AML regulations, ensuring you are safeguarded against the risks of facilitating money laundering activities. Now is the time to review your AML policies and ensure that you and your business remain on the right side of the law.

^{This article has been adapted from one published by the NCA here: https://www.nationalcrimeagency.gov.uk/news/luxury-properties-forfeited-after-six-year-nca-investigation}

Written: October 2024