The Criminal Finances Act 2017 introduced Unexplained Wealth Orders (UWOs): they came into effect from 31 January 2018.

 

The National Crime Agency issued orders against two properties, one in London and one in the South East of England , both owned by a “politically exposed person”, reportedly a politician from Central Asia. The properties are also subject to interim freezing orders and are reported to be worth about £22million. The owner is believed to be from a country belonging to the Commonwealth of Independent States (CIS), which consists of ten former Soviet republics as well as Georgia and Azerbaijan.

 

Luxury housing, mansion, London, Victorian

 

 

What are UWOs?

An Unexplained Wealth Order is an order granted by the High Court at the request of an enforcement authority relating to a specific property. A UWO requires the respondent – generally a non-EEA politically exposed person or someone connected to serious crime – to provide a statement setting out the nature and extent of their interest in the property and how they obtained the property (in particular how they paid for it).

A UWO is a civil power and an investigation tool and it is not in itself a power to recover assets. It may be accompanied by a freezing order, as in the case quoted above.

In order to apply to the court for an Unexplained Wealth Order, the following conditions must be satisfied:

  • The respondent must hold the asset
  • The value of that asset must be greater than £50,000
  • There are reasonable grounds for suspecting the known source of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the asset.
  • The respondent is a politically exposed person or there are reasonable grounds for suspecting that the respondent is, or has been involved in serious crime (in the UK or elsewhere)
  • A person connected with the respondent is, or has been, so involved.

A UWO may only be granted if the court is satisfied that there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient to allow the respondent to obtain the specified property.’ Reasonable grounds’ is not explained.

If the respondent fails to comply with the Order, the following may apply:

  • The asset concerned may be presumed to be a recoverable asset – for the purpose of any proceedings it will be presumed that the asset is recoverable unless the respondent can prove otherwise.
  • An offence may be committed – if the respondent in purported compliance recklessly or knowingly makes a false or misleading statement, he could be convicted of an offence resulting in a sentence of two years imprisonment or a fine or both
  • An interim freezing order may be made – if the court considers it necessary to avoid the risk of the respondent disposing of the asset before complying with the Order
  • External assistance could be sought – if an Unexplained Wealth Order or Interim Freezing Order is made against an asset believed to be outside the UK, a request may be made via the Secretary of State to the government of the receiving country to prevent any person dealing with the asset concerned.

There is a reversal of the normal burden of proof; a UWO shifts the burden of proof in respect of the legitimacy of the assets from the investigating authority to the asset owner.

No conviction is required; the confiscation is not conviction-based. As a result there is no need to prove the asset owner has committed a criminal offence. However the implication of non-compliance with an Unexplained Wealth Order without reasonable excuse can result in recovery proceedings.

Extra-Territorial effect

UWOs have an international reach; a respondent does not to be a UK resident and property can be located outside the UK.

UK enforcement authorities may seek assistance from the foreign government of the country where the asset is based to enforce a UWO (and obtain a freezing order). However it is unlikely that the UK enforcement authorities would expend resources seeking UWOs where a UK interest is lacking.