In May 2017 US authorities reached a settlement with Prevezon Holding Ltd (Prevezon) to bring to an end a decade long investigation in relation to allegations of money laundering. Whilst Prevezon did not admit liability, as part of the settlement they were required to pay $5.8m to the US Government.
The US authorities alleged that Prevezon had comingled funds that were stolen from the Russian treasury in a convoluted fraud with untainted monies that ultimately led to the combined funds being used to fund a series of transactions involving luxury residential and commercial property in New York.
As part of the civil lawsuit US prosecutors filed against Prevezon in 2013, the Dutch authorities were asked to freeze certain Prevezon accounts in the Netherlands. The Dutch Government complied, and froze these accounts in January 2014.
As part of the settlement process in 2017 the US Government was required to file a request with the Dutch Government asking that they release the restrained funds. The Dutch authorities complied with this request. However, the same day that the funds were released in respect to the civil proceedings, the Dutch authorities announced their own investigation into Prevezon, and restrained the funds they had just released. This left Prevezon unable to pay the $5.8m owed to the US Government.
The US Government state in its submission to the court that “The Government did not request this seizure, the Netherlands authorities did not seek, or require, the Government’s approval, and it is not part of or dependent on this action or the previous US-requested restraint, which has been fully released”.
Such a move by the Dutch authorities is not uncommon, and should be a consideration for corporates when considering how best to resolve international compliance issues with a Dutch connection. We note, however, that the timing of the announcement by the Dutch authorities in this case is unusual.
Often when the Dutch authorities are informed of an investigation, either by way of a request for mutual legal assistance, or civil enforcement action, a parallel investigation is launched. This is because the Dutch authorities perceive that whilst overseas investigations to focus on the activity abroad, there are often offences perpetrated in the Netherlands (forgery of the Dutch company’s books for example) that should be investigated. It is now also clear that the Dutch authorities will act against non-Dutch resident companies.
Against a backdrop of increasing international cooperation between law enforcement agencies it is interesting to note the Dutch authorities stance. At present any lack of cooperation appears to be in the context of Dutch authorities believing there is criminal conduct that occurred in the Netherlands. It will be interesting to watch any developments in respect of US, and other, government responses going forward and if any subsequent international investigations enjoy a more limited level of cooperation to avoid another instance of this again.
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