HMRC has made its first ever seizure of non-fungible tokens (NFTs) as part of a £1.4m VAT fraud investigation, which is understood to involve 250 allegedly fake companies and led to the arrests of three people.
HMRC is the first UK law enforcement agency to successfully freeze an NFT. Nick Sharp, HMRC’s deputy director economic crime, said the news ‘serves as a warning to anyone who thinks they can use cryptoassets to hide money from HMRC’.
Andrew Sackey, tax fraud and white-collar fraud
litigation expert at Pinsent Masons, said: ‘The fact that the Fraud
Investigation Service, the criminal directorate of HMRC, is the first UK agency to seize NFTs is very informative of
the strategic direction of travel.' This was 'an impressive piece of investigative
work' by HMRC, 'but what’s more relevant is the fact that HMRC was agile enough to flag
this as a risk and see through the sham and the inherent complexities and
anonymity thought to be afforded by cryptoassets.’
Sackey added: ‘In the UK,
authorities’ response to cryptocurrency money laundering has been informed by
the Proceeds of Crime Act (POCA). Although its three central offences - the
concealing offence, the arranging offence and the acquisition or use offence -
are clear, POCA was drafted in in 2002, when cryptocurrency was clearly not at
the forefront of lawmakers’ minds. This action shows how HMRC has reimagined
how to apply the criminal and confiscation parts of POCA to a modern threat.’
HMRC has made its first ever seizure of non-fungible tokens (NFTs) as part of a £1.4m VAT fraud investigation, which is understood to involve 250 allegedly fake companies and led to the arrests of three people.
HMRC is the first UK law enforcement agency to successfully freeze an NFT. Nick Sharp, HMRC’s deputy director economic crime, said the news ‘serves as a warning to anyone who thinks they can use cryptoassets to hide money from HMRC’.
Andrew Sackey, tax fraud and white-collar fraud
litigation expert at Pinsent Masons, said: ‘The fact that the Fraud
Investigation Service, the criminal directorate of HMRC, is the first UK agency to seize NFTs is very informative of
the strategic direction of travel.' This was 'an impressive piece of investigative
work' by HMRC, 'but what’s more relevant is the fact that HMRC was agile enough to flag
this as a risk and see through the sham and the inherent complexities and
anonymity thought to be afforded by cryptoassets.’
Sackey added: ‘In the UK,
authorities’ response to cryptocurrency money laundering has been informed by
the Proceeds of Crime Act (POCA). Although its three central offences - the
concealing offence, the arranging offence and the acquisition or use offence -
are clear, POCA was drafted in in 2002, when cryptocurrency was clearly not at
the forefront of lawmakers’ minds. This action shows how HMRC has reimagined
how to apply the criminal and confiscation parts of POCA to a modern threat.’
