Unexplained Wealth Order (UWO) legislation was brought into law as part of the Criminal Finances Act 2017 (CFA), but what are Unexplained Wealth Orders (UWOs)? Since coming into force in January 2018, only a handful of Unexplained Wealth Orders (UWOs) have been obtained. They have proved more costly and more difficult to investigate than the UK authorities had anticipated.
In this article, we’ll explore what Unexplained Wealth Orders (UWOs) are and discuss which agencies can utilise them.
What Are Unexplained Wealth Orders?
They are an attempt to tackle the problem of money laundering.
The Proceeds of Crime Act 2002 (POCA) introduced Civil Recovery Orders (CROs) which permitted the confiscation of criminal property using the civil standard of proof – the balance of probabilities. The use of Civil Recovery Orders (CROs) was limited because they still placed the onus of proof on the investigatory body.
The Criminal Finances Act 2017 (CFA) introduced Unexplained Wealth Orders (UWOs) which allow an investigatory body to apply for a court order requiring someone to explain their interest in property and how such property was obtained. In other words, Unexplained Wealth Order (UWO) legislation allows enforcement agencies to investigate the source of assets based on the reasonable belief that they have been gained illegally.
The subject of the order bears the burden of proving the relevant property is not criminal property. If the subject of the Unexplained Wealth Order (UWO) fails to comply with it, then the investigatory body can apply to the court for a Civil Recovery Order (CRO) to confiscate the relevant property.
Applying for an Unexplained Wealth Order
Unexplained Wealth Orders (UWOs) may be brought against those whose assets seem to be inconsistent with their legal wealth.
The investigatory body does not need to have commenced any criminal or civil proceedings with the respondent before to apply for an Unexplained Wealth Order (UWO). Indeed, they are expected to be used outside the usual form of criminal and civil proceedings. As discussed above, if the respondent refuses to disclose the source of their wealth, it can be seized under a Civil Recovery Order (CRO).
Some criteria must be met to investigate assets under an Unexplained Wealth Order (UWO). The investigatory body must demonstrate:
- A reasonable belief the respondent owns the property.
- The property must be valued in excess of £50,000.
- Reasonable grounds to believe that the respondent’s legally declared income would not be sufficient to obtain the property.
- The respondent must either be a politically exposed person (PEP) from outside the European Economic Area or have reasonable grounds to suspect the respondent has or had links to those involved in serious crime.
The agencies and bodies that can apply to the High Court for an Unexplained Wealth Order (UWO) include:
- The Serious Fraud Office (SFO)
- The Financial Conduct Authority (FCA)
- The National Crime Agency (NCA)
- The Crown Prosecution Service (CPS)
Interim Freezing Order
An Unexplained Wealth Order (UWO) may be served alongside an interim freezing order (IFO). An Unexplained Wealth Order (UWO) alone is not enough to seize suspect assets but leads to an application for a Civil Recovery Order (CRO). An interim freezing order, introduced by the Criminal Finances Act 2017 (CFA), amending the Proceeds of Crime Act 2002 (POCA) by adding sections 362J onwards, acts to prevent the respondent or anyone else from selling or otherwise engaging with the property until the order is resolved.
Account Freezing Orders (AFOs) are yet another power available to the investigatory body, again introduced by the Criminal Finances Act 2017 (CFA), amending the Proceeds of Crime Act 2002 (POCA) by adding sections 303Z1 onwards.
Unexplained Wealth Order Cases
The most famous Unexplained Wealth Order (UWO) case was the first one to arise – the case of Zamira Hajiyeva, whose husband was jailed for fraud and embezzlement. It was suspected that both her £11.5 million Knightsbridge property and £22 million golf course were illegally funded.
Although the order was brought in 2018, it wasn’t until the end of 2020 that Mrs Hajiyeva lost her appeals and was ordered to provide information about the source of the funds used to buy the properties.
Further high profile cases include Mansoor Hussain, a Leeds-based property developer, whose home address of 2 Sandmoor Drive, Leeds and other property to a total of £10 million, was paid over to the NCA following their use of an Unexplained Wealth Order (UWO).
Challenging an Unexplained Wealth Order
It is possible to challenge an Unexplained Wealth Order (UWO), but as Zamira Hajiyeva and Mansoor Hussain found out, it can be a long and difficult process. Therefore, if you wish to challenge an Unexplained Wealth Order (UWO), it is essential to obtain legal advice before responding to whichever investigatory body is involved.
At St Pauls Chambers, our barristers are highly skilled and experienced in financial law. If you would like more information about Unexplained Wealth Order (UWO) legislation, or if you or your client have had an Unexplained Wealth Order (UWO) brought against you and would like to challenge it, please get in touch with us today.