Unexplained Wealth Orders explained

Unexplained Wealth Orders (UWOs) became law in the UK in January 2018 as part of the Criminal Finances Act 2017. It is a court order compelling an individual to reveal the source or sources of their 'unexplained wealth'.

The first use of a UWO in the UK hit the headlines recently. As the National Crime Agency (NCA) looks to crack down on what it considers to be 'dirty money' being invested in UK property, we are likely to see them being used with increasing frequency.

First Unexplained Wealth Order in the UK

Most of us probably hadn't heard of Unexplained Wealth Orders (UWOs) before reading about the case of Mrs Zamira Hajiyeva. She is the wife of an Azerbaijan former state banker who was jailed for fraud in 2016.

Mrs Hajiyeva appeared to have an enormous amount of disposable income. She spent £16m in Harrods over a 10-year period. In addition, she purchased a Berkshire golf club and estate and a $42m Gulfstream G550 jet. She held 35 credit cards issued by her husband's bank. A UWO was issued that required her to disclose the source of her wealth. The order compelled her to prove how she could afford to own £22m in UK real estate.

Mrs Hajiyeva maintained that her husband was a legitimate businessman who had acquired mass wealth before becoming the state bank chairman. The National Crime Agency argued that he would not have had the means to amass the wealth that the investigators had traced.

Introduction of Unexplained Wealth Orders

Increasing concern about corrupt overseas officials and serious organised criminals laundering the proceeds of crime through the purchase of UK real estate, led to the introduction of UWOs, which force suspected criminals to reveal the source of their wealth.

Contrary to the general rule of English law, where the accused is innocent until proven guilty, in the case of a UWO the accused is considered guilty unless and until they can prove their innocence.

The UWO requires a person who is reasonably suspected of involvement in, or connected to a person involved in, serious crime to explain the nature and extent of their interest in a particular property and explain how the property was obtained.

Application for a UWO

A High Court judge may grant an application for a UWO if all of the following conditions are met:

• The property or asset is worth more than £50,000;
• There is reasonable belief that the respondent owns the asset;
• The respondent is either a non-EEA politically exposed person (PEP)*, or there are reasonable grounds to suspect that they, or a person connected to them, is or has been involved in serious crime;
• It can be shown that the respondent's personal wealth is incompatible with their income. Their legitimate income is insufficient to enable them to own the asset in question.

*Politically exposed persons (PEPs) are those entrusted with prominent public functions. This includes heads of state, government and military officials, and heads of government-owned entities.

If the subject of a UWO fails to respond, it is presumed that the property under question was acquired unlawfully and is thus recoverable. The property can be seized as part of a subsequent civil action.

Going forwards

The first UWO in the UK involved huge wealth. Of course, the ultra-wealthy will also have significant legal resources at their fingertips to fight a case. they could also drag out the process over many years. Added to that, in respect of foreign corruption it may be much harder to investigate. This is particularly true of countries with less stringent accounting standards.

With that in mind, it may be that the NCA will start to target those with lesser wealth. After all, a UWO may be granted in respect of assets over £50,000. According to NCA reports, the agency has looked into 140 cases where a UWO could be used. It expects to make further applications in the next few months.

Donald Toon, the NCA's director for economic crime 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 across the UK, and we will now seek to move further cases to the High Court."

What should you do if issued with a UWO?

If you are issued with a UWO, the burden of proof resides with you the respondent. It is for you to prove your innocence, not for them to prove your guilt. In other words, you have to prove the property in question is not the proceeds of crime.

Once an UWO is issued, you the respondent have a limited amount of time in which to respond. A failure to respond can be relied upon in civil recovery proceedings under the Proceeds of Crime Act 2002. Accordingly, it is essential to seek expert advice immediately upon receipt of a UWO.

Wells Burcombe's Crime lawyers have significant experience advising clients affected by proceedings under the Proceeds of Crime Act 2002. They can advise on all ancillary matters arising from such proceedings. Should you be affected by an Unexplained Wealth Order, or indeed any connected proceedings, contact us immediately, in London (West Drayton) on 01895 449288 or in Hertfordshire (St Albans) on 01727 840900, or by email via our contact page.