The British Phonographic Industry (BPI) has closed down a voucher scheme being used by Russian music site allofmp3.com.

Earlier this month police carried out a raid in London and shut down the online voucher system used by the Russian music download website, which they alleged was being used to try and sidestep the withdrawal of legitimate payment services on the site from companies such as Visa and Paypal.

According to BPI chief executive Geoff Taylor this was because such payment facilities had woken up to fact that the site was “illegal”.

"Allofmp3.com is an illegal download service and the decision by major credit cards and payment services no longer to support it amply demonstrates that fact,” he said.

A 25-year-old man in Bow, London, was arrested in the raid, under Section 2 of the Fraud Act 2006, for being a UK-based European agent for the website.

The suspect was believed to be selling £10 vouchers via sites such as Ebay, which gave UK and European customers a code allowing them to access the allofmp3.com site and download music.

The money from these vouchers, the police claimed, was then transferred into various offshore accounts operated by the site's Russian owners.

Metropolitan Police officers have also seized computer equipment and paperwork from the suspect for further investigation.

John Kennedy, chairman and chief executive of the International Federation of the Phonographic Industry (IFPI), an organisation that has also been following the progress of allofmp3.com, said: “Allofmp3.com is illegal in Russia, the US, the UK and everywhere else in the world. The action announced today is the latest to highlight allofmp3.com’s long and undistinguished history of stealing music from artists, composers and record producers and selling it at a profit."

"British music fans should beware of voucher schemes like this one that seek to prop up an illegal service that rips off artists,” he added.

Kennedy also hoped that the arrest would be a warning to any other illegal sites. "This criminal investigation demonstrates that trying to profit from the illegal distribution of music online is an offence with serious consequences," he said.

Allofmp3 has been under scrutiny from the BPI and police since 2006, after it was found that despite the site claiming to pay record companies and artists, no permission from record companies to sell downloads in the UK had been sought.

The company also illegally undercut legitimate services such as iTunes, Napster 2.0 and HMV Digital by not compensating the artists and record companies concerned.