HMRC Seizure and Freezing of Crypto Assets
HMRC has the power to freeze crypto assets, and seize them. This is a part of their HMRC Seizure and Freezing of Crypto Assets investigations. If this has happened to you, we recommend that you contact our solicitors for immediate legal advice. We can explain the options open to you, working to resolve the matter with HMRC quickly and effectively.
Crypto assets, also known as crypto currency, are digital money not issued by a bank. The European Union’s 5th Money Laundering Directive defined crypto assets as: ‘a digital representation of value that can be digitally transferred, stored or traded and is accepted…as a medium of exchange’.
There are various digital currencies available, with some of the most common including Bitcoin, Ethereum, Litecoin, Monero, Zcash and Ripple. What unites them is that they are decentralised, being held across a distributive ledger rather than a central bank or administrator. They can be used as a form of online payment, an investment, or a financial instrument.
Crypto Assets and Law Enforcement
Enforcement agencies claim that the unregulated nature of crypto assets facilitates financial crimes such as fraud, tax evasion and money laundering. The police, HMRC and other regulatory bodies have been taking steps to tackle this problem. It is becoming increasingly common for crypto assets to be seized and subject to court injunctions.
By way of example, in July 2021 the Metropolitan Police seized £180m worth of cryptocurrency linked to international money laundering in London. Just the month prior, £114m worth of crypto assets was confiscated, again due to links to criminality.
HMRC Crypto Seizures
HMRC can also seize assets as part of their investigations into civil or criminal wrongdoing. They have wide-ranging powers of search and seizure, extending to intangible assets such as crypto currency. This may give way to a forfeiture notice, which can be issued without the need for a prosecution.
HMRC can retain these assets for a number of years while their investigation is ongoing. This can be frustrating for those concerned. Crypto currency is a valuable asset that is subject to extreme market fluctuations. However, it is possible to raise a challenge and enter into negotiations with HMRC regarding the return of seized assets.
Crypto Freezing Orders
Freezing orders are another tool available to enforcement agencies which are investigating financial crimes. Freezing orders are a type of court injunction that effectively freeze an individual’s assets. This can cover both UK-based and global assets, depending on the type of freezing order that is obtained.
A freezing order can be sought by any creditor. A number of applications have been made regarding crypto currency in recent years, setting the legal precedent. Currently, the courts seem satisfied that crypto assets are ‘property’ and so can be subject to both worldwide freezing orders and proprietary injunctions.
HMRC investigations that involve crypto assets add another layer of complexity. If you are currently being investigated by HMRC and your crypto currency has been frozen or seized, we recommend that you contact us at Altion Law. This is a rapidly evolving area of the law as enforcement agencies – and the legislation – strives to keep pace with technology. Our solicitors remain at the forefront of their field. We can advise and represent those who are the focus of an HMRC investigation, be it a civil investigation or a criminal investigation. This includes negotiating sanctions that have been imposed on assets, such as a seizure or a freezing order.
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