Case Studies

Local Jersey Operation

Mr A owned and ran a jewellery business which allowed him to facilitate the movement of criminal property from Jersey to the UK through the purchase and sale of bullion. This enabled cash to be removed from the Island under the cover of legitimate transactions, and without the cash being physically carried out of the jurisdiction.
The process was carried out in five steps:

• a sum of cash, from the sale of drugs, would be handed to Mr A at his jewellery shop
• Mr A would deposit that cash into his personal and business bank accounts
• Mr A would use the cash to purchase gold bullion from a dealer based in Hatton Garden in London
• the gold would be collected from the London dealer and sold for cash
• the cash would then be available to UK-based members of the criminal enterprise to be used to buy drugs or to cover the operating costs of the enterprise.
  Mr A was convicted in late 2020 of money laundering in connection with the importation and supply of drugs in Jersey. The wider investigation resulted in the capture of drugs with a street value of £900,000.

Less common goods sold by high value dealers

A couple involved in the distribution and sale of drugs attempted to launder £20,000. They tried to exchange Jersey £20 notes into English notes, deposit the cash into UK bank accounts and buy goods to be re-sold later.

The couple initially approached local banks. The banks followed their internal policies on handling cash and refused to accept a cash deposit due to the amount and unexplained/undocumented source. The couple also approached a local car dealership. The dealership was not registered as a high value dealer as its policy did not take significant cash payments. They refused to sell vehicles for cash. The couple then decided to approach a smaller retailer stocking a wide range of electronics and they bought some expensive laptops, computers and smartphones.

The retailer was not registered as a high value dealer and did not have policies on accepting significant cash payments. So, despite the bill totalling over £20,000, the staff processing the transaction did not become suspicious and did not query the origin of the cash.

They accepted transactions that fall within the high value dealer definition in the Proceeds of Crime Law. If they were registered as a high value dealer, they would have appropriate systems and controls in place, apply CDD and BRA measures to the couple and may have been suspicious of the nature of the transaction.

The business in this example appears to be involved in money laundering and may be found guilty of the offence of dealing with criminals. As an unregistered high value dealer may be also found guilty of the offence of carrying on unauthorised specified Schedule 2 business. In addition, it appears that the business should have been registered with the JFSC so may be found to have broken Anti Money Laundering (AML) / Countering the Financing of Terrorism (CFT) Codes of Practice within the Handbook and may be subject to proceedings by the JFSC.

Group Money Laundering

A group of criminals held £50,000 in cash gained from drug trafficking. They targeted a high street jewellery business which held a high value dealer licence. Within a few days, each person in the group repeatedly visited the jewellery shop to purchase items. Whilst none of them spent more than £12,500 in a single transaction, together they laundered £50,000 into jewellery, which could then be enjoyed or re-sold for a profit.

The staff who took payments did not identify that the persons were operating together, and they did not consider the total amount spent by the group over multiple days.

If the business had more effective controls in place in line with the Handbook, they would have applied CDD measures and may have formed a suspicion that money laundering was taking place.

The business in this example appears to be involved in money laundering and may be found guilty of the offence of dealing with criminals.

The business failed to have relevant procedures to prevent and detect money laundering in line with the Money Laundering Order (MLO). They may be found guilty of an offence of contravening or failing to comply with a requirement contained in any Order made under Article 37 of the Proceeds of Crime Law.

In addition, the business may be found to have broken AML/CFT Codes of Practice within the Handbook and may be subject to proceedings by the JFSC.

Operation Meltdown

Operation Meltdown was a three-year investigation into drug money laundering in Manhattan’s diamond district. Dealers agreed to trade 220 pounds of gold and diamonds for more than US$1 million in cash. The inspection resulted in 23 arrests, including 11 jewellers and the capture of more than US$1.5 million in cash, US$1.3 million in gold and 118 kilograms of cocaine.

One jeweller was charged with agreeing to exchange diamonds and gold for US$600,000 in cash. He was murdered in June 2004 less than one month before his trial.

Car Importer avoiding tax

A car importer bought and sold Porsche, BMW, Mercedes and other high value vehicles. He ordered the cars from mainland Europe and created a network of false identities and addresses for cars’ registrations to avoid paying import tax on the vehicles. Police investigators traced the cars back to the importers. They found that numerous individuals were paid £10 each to receive the vehicle registration documents through the post. Many of the cars were then sold for cash and were untraceable.

As a result of the investigations, UK Police secured £1 million in assets following the conviction of the car importer, who was jailed for two and a half years for money laundering and conspiracy to defraud the Revenue Authorities.