Unexplained Wealth Orders: A new power for law enforcement agencies

The Criminal Finances Act 2017, which came into force early this year, gives enforcement authorities such as the National Crime Agency ('NCA'), Revenue and Customs ('HMRC'), the Financial Conduct Authority ('FCA') and the Serious Fraud Office ('SFO') new powers which are designed to help law enforcement act on suspected corrupt assets.

Section 1 of the Criminal Finances Act 2017, which inserts sections 362A-362I into the Proceeds of Crime Act 2002 (‘POCA’), gives the High Court the discretion to grant an Unexplained Wealth Order ('UWO') where there is a suspicion that an asset could not have been purchased by lawfully obtained income.

It has been reported, that the NCA has secured its first two Unexplained Wealth Orders.

The Application (section 362B POCA)

Section 362 B (2) states that The High Court must be satisfied that there is reasonable cause to believe that:

1. the respondent holds the property, and
2. the value of the property is greater than £50,000.

Furthermore, section 362B (3) states the Court:-

must be satisfied that there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property.

Finally, under section 362B (4) the Court must be satisfied that—

• the respondent is a politically exposed person, or

• there are reasonable grounds for suspecting that—

• the respondent is, or has been, involved in serious crime (whether in a part of the United Kingdom or elsewhere, or

• a person connected with the respondent is, or has been, so involved.

The application can be made without notice (section 362I)

In conjunction with a UWO and as a further protection for the State, the Applicant may also apply for an interim freezing injunction in order to avoid the risk that any Recovery Order that might subsequently be obtained being frustrated i.e. preventing the ‘property’ from being dissipated.

What to do if you are served with a UWO?

If you are served with a UWO, you will be required to disclose by way of statement:

1. the nature and extent of your interest in the property in respect of which the order is made;
2. an explanation as to how you obtained the property (including, in particular, how any costs incurred in obtaining it were met);
3. where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order; and
4. setting out such other information in connection with the property as may be so specified.

You may also be required to provide documents of a kind specified or as described in the order.

You must comply with the requirements imposed by an unexplained wealth order within whatever period the Court may specify.

Failure to comply with an UWO without reasonable excuse may result in ‘the property’ being presumed to be "recoverable property".

Comment

This is a big step in English Law as it shifts the burden of proof on the recipient of an UWO to explain the acquisition of said property prior to the authorities proving that the property has been acquired from the proceeds of crime.

We await to see how effective this new tool in the pocket of the authorities is; how successful it is in tackling corruption and whether or not its effect will actually be detrimental to the UK economy as the prospect of being served with a UWO may deter foreign investment in the UK.

Click here to see how Brett Wilson LLP can assist you if you have been made the subject of an Unexplained Wealth Order.