“Unexplained Wealth Orders – now being obtained and used”
Introduction
The introduction by the Government of Unexplained Wealth Orders (UWO’s) in the Criminal Finances Act 2017[1] has been commented[2] upon as a keystone weapon in the state’s fight against grand corruption funds being laundered in the UK[3] and a beefing up of the asset recovery regime which has been overly reliant on achieving a conviction against individuals in the country from which the money was stolen.
Enforcement agencies are empowered to act pre-conviction (or even investigation) to immediately freeze suspect-property which appears out of step with the pocket of the identified owner, who will then be required to evidence the origins and means of purchase of that wealth; and in default risk forfeiture.
First UWO’s
The National Crime Agency announced on 28th February 2018 securing for the first time UWO’s relating to two properties in South East England, to investigate assets totalling £22m that are believed to ultimately be owned by a politically exposed person (PEP)[4].
In January 2019 a diamond ring worth more than £1m has been seized by the National Crime Agency as part of its continuing investigation into Zamira Hajiyeva, the first person in the UK to be subject to an Unexplained Wealth Order. These are the first such orders granted and represent the first time the legislation will be tested through the court.
In addition to the UWOs, interim freezing orders (IFOs) were granted under section 362J POCA, meaning that the assets cannot be sold, transferred or dissipated while subject to the order (IFO).
Donald Toon, Director for Economic Crime at the NCA, said:
“Unexplained wealth orders have the potential to significantly reduce the appeal of the UK as a destination for illicit income. They enable the UK to more effectively target the problem of money laundering through prime real estate in London and elsewhere. We are determined to use all of the powers available to us to combat the flow of illicit monies into, or through, the UK.”
Procedural considerations
With the introduction and use of UWO’s now a live part of criminal litigation practitioners should note the following.
Respondents (holder of the property) are required to provide within a given time frame a statement and other evidence setting out: (a) the nature of the Respondent’s interest in the property; and (b) how the Respondent obtained that interest, in particular ‘how any costs incurred in obtaining it were met’ [s362A(3) and (6) POCA].
If the Respondent fails to provide the required information and evidence, the identified property will be rebuttably presumed to be subject to forfeiture under the Part 5 provisions of POCA. By reason of s. 362C POCA , a failure, without reasonable excuse, to comply with any requirement imposed by an unexplained wealth order in respect of any property has the effect of establishing a presumption that such property is recoverable property for the purposes of any part 5 (civil forfeiture) proceedings that may be taken. In any such proceedings it would be open to a respondent to rebut that presumption. Moreover, the presumption only applies where there has been a demonstrable non-compliance (without reasonable excuse), which is to be distinguished from ‘purported compliance’.
In cases of ‘compliance or purported compliance’ with the requirements of an unexplained wealth order, the presumption that the property is ‘recoverable’ does not apply. In such cases, it falls to the enforcement authority to decide, within a period of 60 days of the date of compliance, what if any enforcement or investigatory proceedings ought to be taken, namely, confiscation proceedings (POCA 2002, part 2), civil proceedings for the recovery of property (part 5) or investigatory proceedings (part 8, chapter 2).
Knowingly or recklessly making a false statement in response to an UWO will be punishable by criminal conviction, triable either way,with a maximum penalty of 2 years imprisonment [section 362E].
Statements compelled under an UWO shall not be generally admissible in unrelated criminal proceedings, but are available to prove the statutory offence.
Where the High Court makes an UWO it may at the same time make an interim freezing order (s. 362J) and appoint a receiver (s. 362N). An interim freezing order may be made where the court considers it ‘necessary for the purposes of avoiding the risk of any recovery order that might subsequently be obtained being frustrated’. An interim freezing order gives the enforcement authority an opportunity to decide what if any further action to take, such as obtaining a restraint order (part 2) or a property freezing order or interim receiving order (part 5).
Section 362K contains power to vary or discharge an interim freezing order and specifies the cases in which an order must be discharged. The court may (as with property freezing orders) make an interim freezing order subject to ‘exclusions’ to permit a person to meet his expenses (s. 362L).
Where property is believed to be located outside the UK, the enforcement authority or (where appointed) a receiver may (ss. 362S to 362T) send a request for assistance in the freezing or management of that property.
Colin Wells, Barrister, 25 Bedford Row London
[1] As amending sections 362A-R Proceeds of Crime Act 2002 for property worth more than £50,000) where there are reasonable grounds for suspecting that the known sources of lawful income of the person holding the property would have been insufficient for the purposes of enabling that person to obtain it.
[2] See for example Transparency International (UK) March 2016 discussion paper, ‘Empowering the UK to Recover Corrupt Assets’
[3] Estimated to be between £23-57 billion annually
[4] if the court is satisfied that he is ‘politically exposed’ or if there are reasonable grounds for suspecting that he, or a person ‘connected with’ him, is involved in or has been involved in ‘serious crime’.