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Unexplained Wealth Orders: A new tool for seizing proceeds of crime

The Criminal Finances Bill, aimed at improving the ability to tackle money laundering, corruption, tax evasion and terrorist financing in the UK, is currently making its way through Parliament. It contains new, potentially draconian, investigatory powers that enable law enforcement agencies, both regulatory and prosecuting, to require an individual to explain the origin of their wealth. These Unexplained Wealth Orders (UWOs) have been introduced to close loopholes that are being exploited to hide the proceeds of crime.

In this blog, we provide a brief overview of UWOs and raise some concerns over their use once they become available to the authorities. If you require more information, please contact us. Our specialist asset restraint and confiscation team have vast experience successfully acting for a variety of businesses and individuals in both civil recovery and criminal proceedings.

What are Unexplained Wealth Orders?

Unexplained Wealth Orders (UWOs) are a civil investigatory tool intended to be used by enforcement agencies investigating serious criminality (the National Crime Agency, HM Revenue and Customs, the Financial Conduct Authority, the Serious Fraud Office and the Crown). They require an individual or company to set out the nature and extent of their interests in property and explain how it was obtained. An order may also require them to provide information or produce documents.

An enforcement agency must make an application to the High Court for a UWO. For an order to be made, the High Court must be satisfied that the respondent holds the property and the property value is greater than £100,000. It must also be satisfied that there are reasonable grounds for suspecting that the respondent’s lawfully obtained income was insufficient for them to obtain the property. Only certain people can be the subject of a UWO: the respondent must either be a politically exposed person, or someone who is, has been, or is connected to a person who is or has been, involved in serious crime, whether in the UK or beyond.

If an UWO is made, the court may also make an interim freezing order prohibiting the property from being dealt with in any way, provided it considers it necessary to avoid the risk of any recovery order being frustrated. If an UWO is made without notice, a freezing order can also be made without notice.

A failure to respond to an UWO will allow assets to be made subject to civil recovery action under the Proceeds of Crime Act 2002. Further, a person can be found guilty of an offence if they provide false or misleading information in response to an UWO. Penalties include imprisonment for a maximum of two years or a fine on conviction on indictment, or imprisonment for a maximum of 12 months or a fine on summary conviction.

How will Unexplained Wealth Orders be used?

The current framework requires a legal conviction in the country of origin before highly suspicious wealth can be acted on and corrupt property seized. This requirement is currently being exploited by overseas individuals and businesses where their home country is in a state of crisis or they hold power. UWOs are therefore being introduced to stop the UK being used as a safe haven for money laundering by overseas criminals.

Although UWOs will be subject to safeguards, such as only applying to specific circumstances, requiring an application to be made to the High Court and their use being guided by a statutory code of practice, there are concerns that these new measures have the potential to be abused by the authorities. Under their current form, which is currently being debated in the House of Lords, the respondent does not have to be a UK resident or even live in the UK. Further, they can be retrospective and therefore apply to property that was obtained before the Act comes into force.

It’s also vital for the authorities to not become too overly reliant on UWOs and use them disproportionately, such as in cases where criminal activity is unproven, or against the family, friends or business associates of suspected criminals. Unfortunately, there is a precedent for this, as the authorities have, in some cases, over-stretched their powers in the pursuit of civil asset recovery under the Proceeds of Crime Act.

When your assets are threatened by enforcement agencies, it’s vital to act quickly and seek specialist legal advice as soon as possible. The powers they have at their disposal are very draconian and widely drawn. They do not require a prosecution or conviction and the onus is upon the respondent to prove upon the balance of probabilities that the assets are not the proceeds of crime.

Lewis Nedas Law – Specialist Business & Financial Crime Defence Solicitors London

Our expert Serious Fraud team has over 30 years’ experience successfully defending clients against fraud and financial crime allegations. We are also ranked in Chambers and the Legal 500 for the high quality of our fraud work, and our expert solicitors are described as 'precise', 'steely determined' and 'always mindful of securing the best outcome'. Our specialist financial crime & fraud solicitors, based in the heart of London, therefore have extensive experience of preparing successful defences to fraud prosecutions, including corporate fraud, whether these are brought by the Crown or a statutory body such as the FCA or the Department of Business innovation and Skills. For more information, please contact Jeffrey Lewis or Siobhain Egan on 02073872032 or contact us online.

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