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Recovery of Laundered Funds in the United Kingdom

July 31, 2014

In a recent decision, Relfo v. Vasani (2014) EWCA Civ 360, the Court of Appeal was confronted with the Liquidator being unable to show evidence of each transaction transferring monies through various bank accounts and ultimately being received by the recipient. There, the Liquidator of Relfo sought funds belonging to Relfo, which were misappropriated and paid to accompany called Mirren. A director of Relfo had close ties to the Vasani family and at a time that Relfo owed substantial monies to HMRC, the director transferred funds from Relfo to Mirren. Simultaneously, a company called Intertrade transferred the identical amount of funds to Vasani. The Liquidator could not show specific transactions between Mirren and Intertrade.

The court said it was entitled to draw the inference that payments were causally and transitionally linked and that the source of the monies that were received by Vasani were the monies that originated from Relfo. Hence, intermediate stages of money laundering did not have to be identified. The court held in the alternative that the Liquidator was entitled to a claim for unjust enrichment even though Vasani received no direct benefit. This was based on the finding that the director had intended that Vasani receive a gratuitous benefit and that Vasani would never have been enriched but for the payment having been made.

 

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