The new way to tackle Money Laundering, Fraud and ‘Dirty Money’?

Unexplained Wealth Orders: the new way to tackle Money Laundering, Fraud and ‘Dirty Money’?

If you are subject to or being investigated for an UWO, it is crucial that you act immediately. Our experienced regulatory and white collar crime solicitors at Eldwick Law are here to assist and will challenge the UWO on your behalf.   

By now, many will be aware of, or at least have a vague recollection of, hearing about  Unexplained Wealth Orders (“UWO”). This is likely due to the highly-publicised case of Mrs Zamira Hajiyeva and her extravagant purchases in Harrods worth millions of pounds over a decade. This was despite her earning no income apart from interest on her British bank accounts. Whilst she has successfully defended extradition proceedings to Azerbaijan, where she would have faced charges of fraud and embezzlement, there is still the underlying matter of the UWO to be challenged. Mrs Hajiyeva was the subject of the first UWO to be issued and since then, only a few more have been issued in relation to property in London. But what exactly is an UWO, how does it work, and what is its purpose?

On 31 January 2018, UWO came into force, the purpose of which is to confiscate proceeds of crime using civil as opposed to criminal powers. This led to sections 1 and 2 of the Criminal Finances Act 2017 inserting new provisions to the Proceeds of Crime Act 2002 (“POCA”), namely sections 362A to 362R. These provisions deal with, inter alia, what an application for a UWO must contain and the individual affected by the UWO must also set out in a statement the following information: –

  1. the nature and extent of their interest in the relation to the property in question;
  2. an explanation of how that property was obtained;
  3. in circumstances where the property is held by the trustees of a settlement, then setting out such details of the settlement as may be specified in the UWO; and
  4. setting out such other information in connection with the property as may be so specified.

At the same time as applying for the UWO, both of which can be done without notice, the relevant authority may also apply for an interim freezing order. This essentially prohibits the individual from dealing with the property in question in any way.

The UWO can be used by a wide range of agencies, including the NCA, HMRC, the FCA, the SFO, and CPS. However, importantly, the individual subject to the UWO does not have to be charged with a criminal offence before one of these agencies can seek to apply for a UWO. They must simply demonstrate to the High Court that there is “reasonable cause to believe”  (a lower bar than the criminal burden of proof – “beyond reasonable doubt”) that:-

  1. the individual holds the property;
  2. the value of the property exceeds £50,000;
  3. that the individual’s lawfully obtained income would have been insufficient for him/her to acquire that property;
  4. the individual is or is connected to a politically exposed person (who in turn is an individual who is, or has been entrusted with a prominent public function), or they are or have been involved in serious crime (either in the UK or elsewhere), or is connected with another person who is or has been.

The general rule is that the statement provided cannot be used in any subsequent criminal proceedings. However, there are some exceptions that apply such as: confiscation proceedings under Part 2 of POCA, s.326E POCA, and s.5 of the Perjury Act 1911.

There is also a fixed time limit within which the affected individual will need to comply with the requirements imposed by the UWO. Pursuant to s.362D(7)(a) CFA, it will only be deemed complied with if all the requirements are complied with. The burden of proof is therefore reversed in that if an individual fails to respond to a request for an explanation, and there is no “reasonable excuse” in complying with the UWO prior to the end of the response period, then there is a presumption that the property has been purchased with illegitimate funds and will be recoverable in civil recovery proceedings under Part 5 of POCA.