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The NCA announced on 29 May, 2019 that three UWO’s had been obtained in the High Court for three residential properties in prime Central London which had been bought for more than £80m and were held by offshore companies. Interim freezing orders have also been made which prevent the properties from being sold, transferred or dissipated during the investigation. See here
The third of October 2018 saw the UK’s first Unexplained Wealth Order (“UWO”) issued by the High Court. The case in question centres around Mrs Zamira Hajiyeva from Azerbaijan, the wife of a former banker jailed for fraud. She has so far spent a total of £22 million pounds on UK real estate and shopping trips to places such as Harrods. To date, the source of this spending has not been explained satisfactorily given the relatively modest declared income of the couple although it is understood that the order in this case may yet be appealed.
For some time, it has been argued that the authorities in this country should be allowed to probe into the means by which individuals of political prominence and those suspected of involvement in serious or organised crime are able to access particularly significant finances used for certain purchases or activities. As of January this year – as a result of new powers introduced by the Criminal Finances Act 2017 – the National Crime Agency and other agencies have been given the green light to seek such orders in an effort to crack down on fraudulent and other criminal financial behaviour.
It is expected that in due course a large number of UWOs will focus on purchases of high value assets and property that appear suspicious to the National Crime Agency (“NCA”) , HMRC, the Financial Conduct Authority, the Serious Fraud Office or the Crown Prosecution Service. About 140 suitable cases have so far been identified. These bodies are all authorised to apply for a UWO. UWOs are issued by the High Court, or in Scotland the Court of Session. Northern Ireland is currently not within the UWO regime.
A UWO can only be issued if there are reasonable grounds to suspect that an individual’s lawfully obtained income would not be sufficient to cover an amount that was spent on certain assets. The worth of the asset or assets in question must be over £50,000 in order to be eligible for a UWO. UWOs are most likely to be sought if the subject is under suspicion of serious crime, has been charged with such activities in the past, or is connected to someone who is a suspect. Subjects of UWOs may reside within or outside of the EEA (European Economic Area). Those located outside the EEA do not need to be suspected of serious crime to become the subject of an UWO.
UWOs reverse the normal burden of proof once there are reasonable grounds to suspect that the individual has been involved in serious crime, ie the accused has to show that they are innocent and came by their assets lawfully rather than the State proving guilt. Confusingly however although a UWO is linked to the suspicion of criminal behaviour, it is a civil, not a criminal, investigatory measure and the issue of a UWO by the court is not a type of criminal conviction. Because it is a civil measure it is subject to the civil standard of proof ie balance of probabilities and not the stricter criminal standard. This makes it harder to challenge them.
Some have said that UWOs create a precedent for the reversal of the burden of proof in English and Scottish law but this is not true. For example the requirement to undergo a roadside breath test to prove that one is not driving under the influence of drink or drugs if one is under reasonable suspicion of being intoxicated has long been a legal obligation and is accepted by almost everyone as a necessary and proportionate legal measure. Without demeaning UWOs one could think of them broadly as the equivalent of a roadside test for white collar criminals.
If you are the subject of a UWO, you will have received notice of a date by which you are expected to effectively explain the source of the finances in question. If you fail to respond to the investigating authority in full within the time specified this may give rise to a presumption that the property in question is recoverable as the proceeds of crime. Any assets that are the subject of the UWO may be then seized in accordance with Civil Recovery procedure under the Proceeds of Crime Act 2002 which allows the authorities to seize any items or property that they can show have been obtained using unlawful gains or finances. Therefore a failure to respond adequately or at all to a UWO is likely to lead to Civil Recovery proceedings. However evidence obtained under a UWO cannot normally be used against the person who supplied it in a subsequent criminal prosecution.
If you have been issued with notice of a UWO or are concerned that you may be liable to be investigated under a UWO it is important that you have a prepared plan to enable you to respond effectively to it and within the time allowed. You should also furnish yourself with suitable specialist legal representation and advice to help formulate such a plan and to respond to the NCA, HMRC etc on your behalf and prepare for the possibility that your explanation is questioned or found to be inadequate and challenge any seizure of assets under Civil Recovery.
For further information surrounding Unexplained Wealth Order, or to discuss representation, please instruct Patrick Cannon today on 020 7242 2744.