Unexplained Wealth Orders

With unexplained wealth orders now part of UK law, Aziz Rahman assesses their likely effect and how people should respond to them.

The Criminal Finances Act 2017 came into effect in Septemberlast year. But one key aspect of it, unexplained wealth orders (UWO’s) onlycame into force on January 31 this year.

UWO’s are an attempt by the authorities to tackle theproblem of money laundering in the UK. We may never know the exact scale ofmoney laundering but estimates put it at around £90 billion a year in the UK.

UWO’s can be used by the Serious Fraud Office, NationalCrime Agency, Crown Prosecution Service, Director of Public Prosecutions, HMRevenue and Customs and the Financial Conduct Authority. While UWO’s are an understandablemove to reduce the amount of money laundered, there are aspect to them whichare cause for concern.

Requirements

A UWO is an order of the High Court. It places certainrequirements on the respondent that must be met within a certain amount of time.That amount of time is decided by the court.

Anyone who is subject to a UWO must:

* Disclose their exact interest in a particular property;

* Explain how they obtained the property;

* Gives details of any trust that a property is held in –and details of the trustees.

In simple terms, a UWO is a way for the authorities to putpeople they suspect of money laundering “on the spot’’ by making them accountfor the source of their wealth.

It is worth noting, however, that a UWO can only be grantedwhere an individual is a politically exposed person (or connected to apolitically exposed person) from outside the European Economic Area or issuspected of being involved in serious crime. There must be reasonable cause tobelieve the individual holds property worth more than £50,000 and that theirlawfully-earned income would have been insufficient to acquire the property.

Enforcement

A court may impose an interim freezing order in connectionwith the property. This prevents the individual (or anyone else with aninterest in the property) doing anything with it until the proceedings havebeen completed.

If an individual fails to comply with a UWO withoutreasonable excuse, the property can be considered for civil recovery under Part5 of the Proceeds of Crime Act 2002 (POCA). If an individual does comply with aUWO, the authorities have 60 days to decide what enforcement or investigationsneed to be taken regarding the property.

Enforcement of a UWO must be considered controversial, as itappears weighted against the individual. A UWO assumes that there has beencriminal activity, which it uses as justification for the action against theindividual. In the past, authorities may have struggled to prove the propertywas the proceeds of crime. With a UWO, the onus is on the individual to showthat this was not the case. The burden of proof is now on the accused ratherthan the accuser.

It is a turning of the tables that makes it even moreimportant that anyone suspected of money laundering seeks the right legalrepresentation.

Civil law

Supporters of UWO’s make the case that they are necessary inorder to stop people benefiting from the proceeds of crime.

But as UWO’s are a civil law device rather than a criminallaw one, the authorities only have to show that a crime was committed on thebalance of probabilities rather than beyond reasonable doubt. This will surelyskew the whole process in their favour.

The civil law has become a means by which the authoritiescan seize the assets, under POCA, of those it believes are involved in crime – withoutthat person ever having been convicted of an offence. UWO’s appear to be anextension of this use of civil law to take a person’s wealth without provingany criminal behaviour.

Defence

Anyone faced with a UWO, therefore, must take the rightsteps in defence of their assets. Otherwise they could easily lose those assetswithout there being any proof of their guilt. In such circumstances, the rightlegal advice can be the difference between keeping your assets and having themtaken without you ever having been proved to have done anything wrong.

Having experience in representing many clients facingrestraint and confiscation orders, we can say with some authority that arobust, informed legal approach can ensure people that people retain what isrightfully theirs. It is understandable if people panic when faced with a UWO. Butwhat they must do is find a legal representative with the relevant experience:someone who works regularly in the field of asset confiscation and restraint,who is used to dealing with the authorities who now have the UWO as a tool attheir disposal. This can be the difference between a UWO being enforced or beingthrown out or altered in the individual’s favour.

The right legal expertise can provide a strong, informedchallenge to the assumptions that have been made by the authorities when theylook to bring a UWO against an individual. Such an approach is the only way toprevent the authorities using UWO’s excessively.

Judgement

If UWO’s prove to be like restraint orders, we will see theauthorities being quick to issue them. This can lead to mistakes and poorjudgement. Such poor judgement can leave plenty of scope for challenging eitherthe validity of a UWO or its precise terms. A successful challenge to either ofthese aspects of a UWO can make all the difference to an individual’s abilityto retain what is rightfully theirs.

The UWO is a new concept in UK law. But it is based on theage-old desire of the authorities to take the assets of those it believes havedone wrong – often without the need to prove any guilt. And that is a conceptthat can be challenged successfully.