Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Well thanks, thanks for joining us today. Welcome to the latest Digital Session in our Diligence 2030 series. So this time we’re focussing on the evolution of asset tracing as part of legal matters and if you want to get in contact with any of the speakers directly, please do click on the resources tab down below and you will be taken to their bios and their contact details and there will be a recording of the session for all those who signed up and weren’t able to make it. We will be taking questions, please use the Q&A function at the bottom to submit these. So we are talking about asset tracing today. It’s a bit, for us, asset tracing is a bit like a treasure hunt and the maps are complex legal documents and the treasures are assets tucked away in very unexpected places so it can be quite a puzzle to put the pieces together but for those with a keen eye it’s a very satisfying process. And on the panel today we’ve got two very experienced practitioners joining, well three if you include myself who come from the challenge of asset tracing and recovery as well from very different sort of viewpoints. We’ve got a lawyer, Oli, we’ve got an investigator, myself and we’ve got a forensic accountant, Freyda so hopefully our experiences are helpful and we are able to share some of our kind of learnings around asset tracing and these kind of cases. So thanks for, thanks for joining us and I look forward to an engaging and informative session. My name is Mark Tibbs, I’m a partner here in the Cyber Risk and Complex Investigations Practice within Mishcon de Reya and I’m going to hand over to Freyda to introduce herself as well
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Hi everyone, I’m Freyda, forensic accountant in Mishcon de Reya. My work is mainly internally facing assisting the legal teams with all things accounting. Yeah that’s me, thank you. Passing over to Oli for his introduction.
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
Thanks Freyda. My name is Oli Gepfert, I’m a partner at Mishcon’s in the Civil Fraud and Asset Recovery Group. I’ve been at the firm for about 15 years and yeah, I specialise in cases that are complex and kind of cross border, multi-jurisdictional and, and more often than not cases in which we act for claimants who are facing off against opponents who have taken steps to conceal or hide assets and so the real prize is not just winning the legal case but also recovering money and putting money back in, usually back in the pockets of, of clients who have often been the victims of fraud and in doing that work with Mark and with Freyda and I think we will cover some of the things we do as we go through this, this seminar.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Great thanks, thanks Oli, thanks Freyda. So I mean arguably in recent years the landscape of asset tracing has, has been, is changed you know significantly with a, with a push towards greater transparencies, arguable in certain jurisdictions it is the case and in certain other jurisdictions it’s certainly not but financial regulations, international cooperation and technological advancements have peeled back some of the layers of secrecy that we once saw and it’s, it’s also you know, that has streamlined some of the work that we do to uncover assets especially concealed assets but it has also complicated the task of asset tracing. So it presents new opportunities as well as fresh challenges so I’ve got a question for Oli and for Freyda here around, around global transparency but, but in your experience how have recent global transparency initiatives such as public registers of beneficial ownership, has that altered methodologies and effectiveness of asset tracing in your experience?
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
Well Mark I’ll, I’ll start with that one. It’s a good opportunity to talk, and I’ll give you a practical example, we’ve recently had changes at Companies House which is our, you know, our, our corporate registry in England that have affected kind of how we kind of trace certain assets. So as part of the Economic Crime and Corporate Transparency Act which came into force, which came into force last year and, and it’s being implemented and will continue to be implemented over the course of next year, we now have some visibility at Companies House in relation to overseas companies. So, so companies outside of the UK but who want to buy, sell or transfer land or property inside the UK and those companies have to register with Companies House and they have to say who their, who their register, their beneficial owners are and beneficial ownership is quite broad. I won’t go into too much detail but in essence if an individual holds directly or indirectly more than you know, 25% of the, of the shares in that overseas company or controls more than 25% of its voting rights then it’s likely to, well it will classify as a beneficial owner and it will have to be registered. Now property, property in London in particular but across the UK is, is a particularly popular asset class and something that we find ourselves looking at often in the context of these kind of big multi-jurisdictional fraud disputes and asset tracing claims. Very briefly I want to give you two kind of examples of recent cases, these are cases that are ongoing that we’re working on at the moment. In one case the overseas register was central as a resource in, in for us to make enquiries and identify that our target, our intended defendant in the proceedings actually had property in the UK. So in that respect you know, before the introduction of the overseas entity register, we would have had suspicions but we wouldn’t have been able to confirm that so it has been very useful in that respect. The other case is one that involves discrepancies between what our opponent has told our client what they warranted effectively about their assets, they’ve said I don’t have any assets anymore but actually that contrast with information that’s been recorded on the overseas entity register so in brief, those are two ways that that relatively recent introduction is, is benefitting us and making our jobs slightly easier.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
It, it feels like with the introduction of the, of the beneficial ownership register Oli that there’s a floodgate that’s opened and you know, maybe those people are unexpectedly publish… you know, having their, their ownership published but I wonder if you think that that is going to last or if you think that’s going to have an impact where you know, where people are finding themselves yeah, more exposed and less private you know, is, is that going to be a lasting source of information for when we’re doing asset tracing or do you think people are going to start to you know, take steps to, to change that now?
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
Um, I, I suspect in, in you know, it’s always a bit of an arms race right you know, new tools are invented and then people come up with ways of trying to sort of get around those new rules imposed and, and the real fraudsters, the kind of the you know, the people who are determined to do you know, determined to hide their assets will find ways of, of trying to circumvent those rules. That said, it is another resource, it’s another frame of reference and that makes it very useful because part of what we do you know Mark, you know this better than most, is we are looking at different, we’re looking at different reference points and we’re trying to find patterns you know, and establish that there’s a connection between you know, an asset and an individual or groups of individuals and so to the extent of that resource is out there and it’s new, that is you know, that is helpful and often we’re looking for inconsistencies like in you know, in the example I gave where the disclosure given by the individual about his assets is different than what’s on the public record.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Contrasting yeah. Yeah, helpful stuff so, so Freyda how about you in your experience how’s this changed the job that you do?
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Yeah generally if there’s great transparency there should be more information available, more publically available financial information, filed accounts and so on so that will give us greater sort resources to investigate and it opens up new avenues of investigation as well. But particularly for example the Companies House the beneficial ownership register but that doesn’t necessarily mean there will be greater accounting information available, companies are still very much legally allowed to file micro accounts or short form accounts if they meet the criteria for doing so. There still could be fairly limited information available at Companies House for those particular companies and as Oli mentioned, you know if someone is a fraudster there’s no reason why the account they file at Companies House can just be, well nonsense as such because the information that is filed there isn’t policed by Companies House. But again as Oli referred to, those kind of, those accounts that are filed at Companies House that may not mean an awful lot, they could flag some discrepancies with information that we do have and again that could be quite useful.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Right got it yeah so, so in essence it’s a useful, another source, it’s probably going to have a bit of a shelf life for a few more years at least and it’s going to certainly contribute towards our investigations. Thank you very much. Shall we move on to the next, the next topic. We’ve only got three or four topics, it’s a big topic area to cover but I think we’re moving on now to how technology has changed asset tracing.
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Yeah exactly, so there’s obviously various technological developments and these are utilised by people to both conceal assets and those who are looking to trace those assets. Things like data analytics, artificial intelligence to assist those looking to trace. This is a question probably mostly for you Mark on our side of things in the investigation arm. How does the integration of these different technologies assist you with recovering these assets?
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Yeah so, so I think the first principle of asset chasing is that there isn’t really like one database or one solution that will give you the answer, it’s, it’s a true investigation in the sense it’s a complex puzzle that you have to piece together for those of you in the audience that remember what was it, Catchphrase where they sort of gradually reveal tiles on a screen. It’s a bit like that and you have to try and work out what’s actually behind it so you get a little bit of information here, a little bit of information there and you start to develop a clearer picture of the holdings of an individual or a company and it’s time consuming, it’s labour intensive and certain things have changed that in the last sort of 10 or 15 years, you know digitalisation of information has opened up new sources of information, social media although people are much more careful now than they used to be, it’s still a case that people publish information about their lives and about their, their businesses on line so you know those are still rich seams of information around assets and yeah, and the asset and transparency laws that Oli referenced earlier but so what I would say is you know, for people out there looking for tips around using technology, I think there’s, there’s a lot to be said for keeping your eyes open, there’s a lot of people out there that are working out where information lawfully can come from, from open sources, OSINT, there’s a whole community of people doing OSINT investigations, we do our own research and programme at Mishcon where we are looking to valuate new tools and new techniques so I’d urge those in the investigative space to keep their sources and their techniques sharp that way. But going back to sort of like newer technology and AI in particular, because it’s such a complex and labour intensive process, the act of sort of asset tracing, AI is just one of those, one of those new tools that, that speeds up the process of synthesising data from multiple sources so it’s, it’s extremely useful and any investigators that are not doing it are missing a trick, not using AI and not sort of harnessing the power of AI to do this. Obviously there are some, some issues with AI, there’s the problems hallucinations and you know, AI specifically large language model sort of making stuff up but there are ways and means of kind of checking, verifying so we use a private LLM at Mishcon to extract entities from documents to summarise complex legal information but ultimately what it does is it enhances the speed I would say because it, because it is a systematic process so that’s, that’s the benefit of it. It’s, it’s like having you know, a slightly bigger engine in a car, it helps you go faster. It doesn’t, it doesn’t, what it won’t do is if you are going to expect to answer all your questions, it is certainly not going to do that, it’s just going to, it’s just going to help you with the synthesis. But for example you know, just thinking about sort of needles in haystacks, you know a case that Oli and I worked on previously we were able to identify or attribute hundreds of millions of pounds of assets that relied on just one address that was sort of in, in a bunch of like probably hundreds of documents, planning documents and that was our pivot point to working out you know, the rest of the, of the corporate structures and the rest of the assets, property assets in the UK in that case. So it’s a, yeah it’s a needle in a haystack job and, and technology can help with it. We’ll, we’ll talk a bit later about blockchain analysis in one of the, in one of the following questions if we’ve got the time but all that said, I’m sorry I’m rambling a little bit, but I just want to say one more, one last point is that technology does, it speeds things up, it does certain things that obviously documentation is important in asset tracing but it’s not the only solution and it shouldn’t be over relied on so you know, if you’ve got, interviewing people for example, you might get to the answer much more quickly just by speaking to someone whose got knowledge of a, of an issue so, so that can be quicker than any AI tool if you’re looking at the wrong documents, you’re just going to get the wrong answers so, yeah so it’s the investigator’s ability to sort of create a collection strategy which capitalises on, on all sources and uses technology to the best, you know to its optimum which is what gives you the edge in asset tracing in my opinion.
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Yeah that’s similar from my experience from a forensic accounting angle, there’s obviously, there’s tools that help digest information more quickly. It’s not a case of you put the information at one end and it spits out a result at the other end, there’s always that need for human interaction and human review.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Yeah it’s a shame.
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Oli… yeah.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
We’d all like that.
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Sorry I was going to ask Oli if you’ve got anything to add to that?
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
Yeah the one thing I would say about, about the use of technology and particularly the use of new you know, relatively kind of recent developments is it’s great if you’re investigators staying sharp and it’s great if they can offer you different tools and as long as they are the right tool for the job. You do, as from the lawyer’s perspective, you do need to understand the process, you need to understand how those tiles have been turned over or you know, how those documents have been reviewed etcetera because you need to be able to, ultimately you need to be able to explain it to the Court. You know, we are talking about you know in this context we’re talking about you know Freyda’s forensic analysis, you know Mark’s investigation to reveal facts about where assets might be. Those are feeding into a Court process invariably and we’re making an application you know maybe to freeze assets or we’re bringing a claim to recover assets and at some stage I am going to have to go in front of the Judge and explain how we found what we found and if I don’t understand the methodology that we used to get there, I am not going to be able to explain it to a Court. And that’s the one word of warning I’d give about using new technology. Use it if it makes your life easier by all means but you’ve got to, you’ve got to understand how you got to the result that you, that you got to. And just to do that, just have a good and collaborative relationship with your investigators, speak to them, make sure it’s iterative and that you feedback and that the lawyer is shaping and guiding the investigation and the investigators are shaping and guiding the lawyers but that’s it really.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Great. We will move on to our next topic which is hiding assets which I love hearing about because well it’s just clandestine isn’t it. So yeah, so concealing assets or hiding assets so as, as things change and you know people are, especially you know, fraudsters or people that are doing illicit things are changing their tactics to conceal assets. This has become more sophisticated or has it? That’s a good question for the panel. I am aware of you know, the use of sort of offshore accounts and shell companies and all sorts of complex structures but as I understand it this is just the tip of the iceberg and those determined to hide assets are, are trying to find new ways of hiding them and creating schemes you know, so, so like you said Oli, it becomes a bit of cat and mouse and seems to require vigilance and adaptation but the question for you guys is, you know, with, with this ever evolving set of methods to hide assets and crypto currencies for example or you know, the use of new structures. What are the emerging trends that you’ve observed in asset concealment and I appreciate that actually maybe this is more of a slow moving beast than a very quick one but you know, how is this influencing the approach and, and what, what can people do to sort of remain effective in, in unpicking these kind of structures? Freyda first of all, let’s go with you.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
That’s interesting so it’s more of the same but in, yeah in different places and Oli how about you, what’s your experience with dealing with the fraudsters that you are up against?
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
It’s, it’s similar, similar to Freyda’s, things go in and out of vogue you know, there was a spate of cases, probably six or seven years ago involving New Zealand Trusts because for a while they were very popular with a certain group of people who were seeking to conceal their assets because they were quite opaque. I think they changed the law in New Zealand you know, effectively in response to, to that and, and now they are not as popular anymore. It used to be that when we were looking at you know, working for victims of APP fraud most of the places we were, were kind of tracing the money and going after the money was Banks but over the last three or four years, currency exchange companies, those, those money transfer services that you see have become you know, kind of drawn into that as well and so we are seeing those used to, to kind of disperse the, the proceeds of fraud. So you know things, you know crypto currency I think if we’ve got time, we’ll talk about separately but crypto assets is not something that really existed in the asset tracing space sort of 15 years ago but is now part and parcel of what people are doing all of the time so things come into you know, in and out of vogue but fundamentally you know, people remain interested in luxury assets you know, property, boats, cars, watches, um, that kind of stuff has stayed the same.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Well I don’t know if that’s comforting or not but yes, anyway we’ll just take it as an observation. I think moving on we do have time I think just to cover our last topic. This is, a, a these sessions are designed for the you know, for it to be short and sharp for the TikTok generation I guess, to grab your attention for 25 minutes. But we’ll move on to our next topic which is crypto currency and asset tracing.
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
So let’s cover that quite quickly but, in the time left, but with the emergence of kind of crypto assets I think we’ve got a relatively novel frontier in the realms of asset tracing. These are digital assets, you know they operate on decentralised networks, they’re designed often with privacy in mind and you know, they present some unique challenges and opportunities I think for asset tracers. The question I suppose is considering the nature of the transactions on many blockchain platforms, how has the rise of these crypto assets impacted the strategies and the tools that asset tracers have to employ to effectively track and recover those assets. Mark do you want to give us…
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Sure.
Oli Gepfert
Partner, Civil Fraud and Asset Recovery Group
Mishcon de Reya
…a few words on that?
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Yeah so a lot of our cases now have, especially in the fraud world, have some element of crypto currency and you know, because it has become a you know, it’s overwhelmingly legitimate the use of crypto currency because of speculation and the market’s matured but, but certainly they do present another way for people to conceal wealth or make transactions you know, over, over the internet very simply without involving too many third parties and it’s relatively simple to place crypto assets outside of the view of most people by transferring them to sort of anonymous hardware wallets for example but there’s, but, sort of a big but, is that with crypto assets there’s always a digital trace somewhere of some description depending on what’s available to an asset tracer so you know, like a forensic copy of a drive used to make transaction or review of emails and even with a bit of luck, you know some deep web research, that can allow you to find more information about crypto currency holdings and crypto currency transactions. So when you talk about sort of like the, the new ways and new methods the blockchain generally is kind of public, not all blockchains are but bitcoin and ethereum are, are public so all transactions are kind of available for you to look at. That doesn’t mean you know where they are going to and where they are going from and that’s the kind, that’s, that’s the issue to try and attribute kind of where the transactions are happening to and from on the blockchain. There are plenty of, of organisations that allow, sort of provide that kind of software to identify entities on the blockchain and that, and that’s becoming much more mature now, there’s investigators that are well trained and understand that extremely well. We do that for our cases, we use various different platforms to do that but the learning for me is that not, again is not to over rely on that technology because there are other bits of information that are available in crypto cases not just on the chain, not just on the blockchain so while it’s useful to, to look at that it’s, it’s crucial to look at that what we found in our cases is that there may be information that’s available that people have published online for example, or there’s other opportunities for disclosure so for example, where third parties are using websites there might be legal opportunities to go to that website with a you know, some sort of disclosure order or subpoena, same with domain registrars for example so there is sometimes more or, or where, sorry transactions have happened over the counter for example, so off the blockchain and there’s… but there’s communications that have gone on perhaps on telegram or something like that. So there is evidence out there from other, other sources as well. So what I would say as well, yeah so the learning really is just not to focus on, on just the blockchain, that is one source but it’s not the only source and you know just to give you an example of that we were able to attribute over a million pounds of crypto assets to a suspect not because of what we saw on the blockchain but because of what we saw outside the blockchain we were able to… they were using a particularly unique user name that, and they were all over I think it was Reddit talking about their crypto holdings and how much they’d lost in the crypto winter so we were able to sort of like reverse engineer and work out, oh if they’ve lost 300 grand then they must have had X amount and, and actually we were able to also find a vanity domain which is a kind of, there are things called ethereum domains and, and our target had one of those and in that was a holding over a million, over a million pounds worth of crypto so eventually we used that in the case and actually it’s been seized, you know that money is no longer available to that person so, so and that wasn’t the work of the blockchain at all, it was just, it was just looking outside of it. So, so don’t, don’t throw the baby out with the bathwater and think you’ve just got to look at the blockchain, there are other opportunities is my view. Freyda how about you, what are your experiences with crypto currency and, and forensic accounting. Does that come up much in your cases?
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Um, no direct experience myself and just for the interest of time and very, very briefly about tracing funds that go through sort of the blockchain, kind of similarly with fiat currencies you have different methods of tracing those and it is just an important to be able to substantiate and support the kind of tracing methodology that you use to trace those funds.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
Yeah we’ve seen cases haven’t we where we’re looking at you use it sort of applying traditional standards of, of forensic accounting to crypto tracing to get to different answers but and, and the kind of learning from that is you know, again you’ve got to be able to support it you know to, to use it in any meaningful way.
Freyda Thompson
Forensic Accountant
Mishcon de Reya
Yeah.
Mark Tibbs
Partner, Cyber Risk and Complex Investigations
Mishcon de Reya
I think, I think we may have come up against time so if anyone’s got any questions please feel free to reach out to us directly. Thank you so much for joining us today. There will be a recording like I said at the beginning, there will be recordings sent out to all those who signed up and yeah, you can see us, all our contact details on the resources tab below. So thanks for joining.
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