January 2018 saw the introduction of Unexplained Wealth Orders (UWOs). For the first time enforcement bodies such as the National Crime Agency, HMRC and the Financial Conduct Authority have at their disposal this draconian tool to help in the confiscation of the proceeds of crime.

WIDE SCOPE OF ORDERS

UWOs force individuals to explain – in clearly defined circumstances – how they accumulated certain assets. While a lot of the media coverage of UWOs focuses on their likely impact on corrupt billionaires, oligarchs and others who have accumulated property in London in recent years, it’s crucial to appreciate that UWOs are much wider in scope. In fact enforcement authorities can apply them to any asset worth more than £50,000.

These types of investigatory powers exist in only a few jurisdictions around the globe. (They have proved an incredibly effective method of tackling drug cartels in Ireland for example.) Their introduction in the UK demonstrates clearly that the fight against corruption is right at the top of the government’s agenda.

WHO WILL UNEXPLAINED WEALTH ORDERS APPLY TO?

Where someone is suspected of involvement in serious crime (or of being connected to such a person) a UWO obliges them to explain their interest in identified property and how they obtained it. Enforcement agencies must have reasonable grounds to suspect that an individual’s known lawful income would be insufficient to enable him or her to obtain that property.

When an order is obtained the individual against whom it is made must set out their precise interest in the property and explain how they obtained the asset. Failure to comply with a UWO opens up a raft of options to the authorities, including freezing orders, recovery of the asset and instigation of criminal proceedings.

WHY ARE UWOs CONTROVERSIAL?

The power granted to enforcement agencies by UWOs is significant. And fears have been raised that, if not carefully monitored, the orders could be inappropriately used. Individuals facing a UWO must prove they own an asset legitimately. This reverses the normal burden of proof that would require the investigating authority to prove the asset was obtained illegitimately. Some have argued that this could mean the procedure falls foul of the Human Rights Act and the right of an individual to a fair trial.

COMMENT

So the power now exists to investigate suspected proceeds of crime using a UWO. Like any law however, effectiveness can only be measured by the way the power is used. It’s not known how often these orders will be applied for in practice. There are also concerns that some of the enforcement authorities empowered to use them lack the resources to carry out the necessary investigatory work.

That said, within a month of the orders coming into force the National Crime Agency obtained two orders in respect of property worth £22million. So it does seem – on the initial evidence at least – that authorities are determined to use UWOs to stem the flow of illicit money in and out of the UK.

To discuss any of the issues raised in this article please call us on +44 (0) 203 670 5540 or contact us online .

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