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HMRC seizure of NFTs

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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.’

Issue: 1564
Categories: News