Brian Sims
Editor

Unexplained Wealth Orders: Underused and undervalued?

INTRODUCED IN the Criminal Finances Act 2017 and praised as a vital new tool for the authorities in their efforts to tackle organised crime, hopes were high for Unexplained Wealth Orders (UWOs). Nicola Sharp considers how matters have developed across the ensuing four years.

In essence, the UWO was intended as a means for the National Crime Agency (NCA), the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), Her Majesty’s Revenue and Customs and even the Director of Public Prosecutions to freeze and even possibly seize an individual’s assets if they were believed to have been obtained illegally.

The timely success of a TV drama about shady goings on led to UWOs being dubbed ‘McMafia Orders’ in the mainstream press. If there had been an orchestrated PR campaign to boost the profile of UWOs, it couldn’t have gone any better. By 2019, the NCA had let it be known that the organisation was looking at more than 100 potential targets for UWOs. It was never likely that all of them would result in UWOs. Yet, so far at least, the UWO has done little to merit the enthusiasm of its advocates.

For clarity, any UWO requires an individual to explain how they acquired a particular asset. If the explanation given is not considered satisfactory, the authorities can then begin civil recovery proceedings under the Proceeds of Crime Act to seize those assets without any civil or criminal proceedings having begun against an individual. 

Individuals have to provide information about their assets without ever being convicted of wrongdoing or even charged. Despite the process being heavily weighted in favour of the authorities, the bestowing of UWOs has been something of a rare occurrence. In point of fact, they had been used in just four cases come the end of last year. The NCA is the only authority that has chosen to use them since their introduction.

UWOs have been used nowhere near as frequently as most observers thought would be the case. What should also be considered is the shaky start that the NCA has endured when it has come to using UWOs. While there have been some success stories – and some very desirable McMafia-referencing press coverage to accompany them – there have also been failures.

First UWO case

The first UWO case involving Zamira Hajiyeva, the serial big spender and wife of a jailed Azerbaijani banker, has so far gone to plan for the NCA. Hajiyeva failed to have the UWO discharged and, late last year, the Supreme Court refused her permission to appeal. Her response to the UWO will now determine whether civil recovery proceedings are brought. 

Last year also saw the NCA’s most notable UWO success to date as a businessman – namely Mansoor Mahmood Hussain – with alleged criminal connections was unsuccessful in challenging a UWO and ended up surrendering assets with a total value of £10 million.

However, 2020 also witnessed the High Court quashing UWOs that had been obtained by the NCA over real estate owned by Dariga Nazarbayeva, the daughter of Kazakhstan’s ex-president, and her son. The NCA believed the property had been bought by Nazarbayeva’s former husband who is a convicted criminal. The court stated that the NCA’s assumption was mistaken and unreliable and that the agency had been wrong to serve the UWOs on a professional trustee and four overseas corporate entities who were the legal owners of the properties.

As track records go, the NCA’s use of UWOs is patchy. Despite this, we may well see greater use of UWOs in coming years. Like everything else, the work of the NCA (and any other agency that could use UWOs) has been disrupted by the pandemic. COVID-19 has seen investigations disrupted and delayed, which may mean more UWOs once normality resumes and investigations return to their pre-pandemic pace. The authorities might even come to see UWOs as a straightforward way of targeting smaller and less high-profile targets than the Hajiyevas and Nazarbayevas of this world. This could result in many more UWOs being issued – albeit involving lower stakes – as the authorities look to take a steady and low-risk approach towards  using them.

Gaining momentum

There’s also the likelihood that UWOs could be used more as a tool when an investigation gains momentum, even if this doesn’t result in confiscation. This would certainly be neither unusual nor improper. Indeed, the Home Office’s own Code of Practice calls the UWO an investigation tool that’s intended to assist in building evidence. 

It would be wrong, therefore, to dismiss UWOs as a ‘white elephant’ after only a few years. They have not yet matched the hype that surrounded their arrival and they’ve not been used enthusiastically by any agency other than the NCA. That said, there will be more of them in the pipeline sooner rather than later.

That will mean many more individuals having to account for their wealth. Such individuals should be looking to challenge the validity of any UWO they face as the NCA’s failings to date have shown that UWOs are not fool-proof. 

Issues regarding to whom a given UWO is issued, when one can be issued and what constitutes a failure to comply with one of these document could all prove to be fertile ground for a robust legal challenge to the authorities if and when they decide to make greater use of this avenue.

Nicola Sharp is Legal Director at Rahman Ravelli

Company Info

Security Matters

Western Business Media
Dorset House
64 High Street
East Grinstead
RH19 3DE
UNITED KINGDOM

https://security-matters-magazine.com