What is an unexplained wealth order (UWO)?

UWOs are a relatively new enforcement tool which came into force in January 2018 with the passing of the Criminal Finances Act 2017 (CFA). An UWO requires the respondent to provide a statement setting out the nature and extent of their interest in the property; how they obtained the property (including how any related costs were met); and any other information in connection with the property as may be so specified. Applications are made to the High Court by enforcement agencies, though the National Crime Agency (NCA) are the only body to use them thus far.

Once an UWO is issued, the individual affected has a limited amount of time to provide adequate evidence to show that the asset was obtained lawfully and if they fail to do so the High Court will consider it “recoverable property” for the purposes of a civil recovery order under the Proceeds of Crime Act 2002 (POCA).

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Under what circumstances will an UWO be issued?

An UWO can be made in respect of any property valued at more than £50,000, if the court feels that there is reasonable cause to believe a person has an interest in it and reasonable grounds to suspect that the asset was purchased with ill-gotten gains. The standard of proof is lower than the criminal standard of beyond all reasonable doubt, meaning the court must only prove on the balance of probabilities that the asset has been acquired illegally. The court must also be satisfied that the person against whom the order is made falls into any of the following categories:

  1. A politically exposed person (PEP);
  2. A person about whom there are reasonable grounds to suspect involvement in serious crime;
  3. A person connected with the respondent is, or has been, involved in serious crime.

Challenging an UWO

Enforcement agencies can make mistakes and It was announced on 8th April 2020 that two members of Kazakhstan’s political elite had won a High Court challenge against Unexplained Wealth Orders concerning three London properties.  The court found that Ms Nazarbayeva and her son were independently wealthy enough to pay for the properties and had proved little or no contact with the connected criminal o several years. The judgment represents the first successful challenge to an UWO since the legislation came about. The judge ruled that the NCA incorrectly had failed to satisfy the statutory test and incorrectly relied on the use of legitimate complex corporate structures, without any further basis, as giving reasonable grounds for suspicion of wrongdoing. The respondents chose voluntarily to provide the material that was required to be disclosed pursuant to the UWOs. Whilst every case turns on its facts, in circumstances where the NCA’s evidence and assumptions were flawed, being able to correct any inaccuracies through the submission of persuasive evidence may lead to an UWO being discharged. While the NCA has indicated that it will appeal the decision, the judgment does highlight that UWOs can be successfully challenged, and that courts will require the NCA to fully justify the grant of an UWO.

Conclusion

The law surrounding UWOs is particularly complex as it involves navigating both criminal and civil law. The relatively small number of UWO applications to the High Court to date suggest that the NCA are proceeding carefully, however we can expect to see the further use of UWOs in the future to address money laundering. Our lawyers have a broad understanding of the process and legal requirements in obtaining one, they ensure to take a robust approach in managing the UWO and assessing whether it has been acquired lawfully. As a firm, we are committed to fighting every case of this type from the smaller to the most difficult and complex.

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