11/11/19

Unexplained Wealth Orders | A Weapon On The Rise

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Following a slow uptake, UK investigators and enforcement authorities are warming to the deployment of an Unexplained Wealth Order (“an UWO”) in the pursuit of the recovery of assets from anyone suspected of having benefited from their involvement in crime.

Owners of substantial property portfolios, seemingly with particular regard to London, are in the firing line, and would be well advised to be alert to the significance of the effects of an UWO.   

We provide an explanation of the nature and effects of an UWO and their recent history below.

What Is An UWO? | Kangs Financial Restraint Order Experts

  • Introduced by the Criminal Finances Act 2017, an UWO is a court order requiring a person (“the respondent”) to provide a statement explaining the origin and details of property which they hold when the value of that property appears to be disproportionate to their known income. The order may also require the production of all related documents
  • If they fail to comply without reasonable excuse, the property in question is presumed to be recoverable as the proceeds of crime in civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002 (“POCA”), unless the contrary is shown
  • In addition, where the court attaches a penal notice to an UWO, non-compliance with the order is punishable as contempt of court
  • Any deficiencies in the answer provided by the respondent might be seized upon by the enforcement authority in proving that the property does indeed represent the proceeds of crime in civil recovery proceedings
  • Any person who becomes the subject of an UWO knowingly or recklessly provides materially false or misleading information, may be convicted and sentenced for a criminal offence
  • Otherwise, subject to limited exceptions, the statement provided in response to an UWO may not be used in criminal proceedings against the respondent

What Are The Conditions For Issuing An UWO? | Kangs UWO Advisory Team

An UWO may only be issued if one of five specified enforcement authorities, including the National Crime Agency (“NCA”) and HMRC, makes an application to the High Court and satisfies the court that:   

  • There is reasonable cause to believe that the respondent holds the property in question (whether alone or with others) and that its value is greater than £50,000; and
  • There are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient to enable the respondent to obtain the property; and
  • Either:
    • The respondent is a politically exposed person (“PEP”), i.e. a person who is, or has been, entrusted with prominent public functions by an international organisation or a non-EEA state, or someone connected with such a person in a specified way (e.g. a family member); or
    • The respondent is, or has been, involved in any country in serious crime

What Is The Procedure? | Kangs Financial Restraint Order Team

  • Applications for an UWO may be made to the High Court by one of the specified enforcement agencies without giving any notice to the respondent
  • The respondent is unlikely to be aware of the issue of the proceedings until served but may then apply to the High Court to discharge the order
  • The UWO itself will specify the manner in which the required information is to be given and the time period for compliance

Freezing Orders | Kangs POCA Freezing Order Advisory Team

  • When a court grants an UWO, it will usually be accompanied by the issue of an Interim Freezing Order under section 362J of POCA which prohibits the respondent and any other person with an interest in the relevant property from dealing with it in any way
  • Before making such an order, the court must be satisfied that it is necessary to avoid the risk of any future claim for recovery of the property from being frustrated

The Record So Far | Kangs Financial Recovery Team

  • As at September 2019, UWOs have been issued in four investigations
  • In each case, they were applied for by the NCA
  • All of the investigations involved prime properties in London
  • Notably, while the first two cases were based on the fact that each respondent was a PEP, the other two were obtained on the basis that each respondent had been involved in serious crime where:
    • The one case targeted a businessman from the North of England suspected of involvement in drug trafficking, armed robberies and the supply of firearms. The UWO required him to reveal the source of funds used to develop his £10 million property empire
    • The other related to a Northern Irish woman with suspected links to organised criminals involved in paramilitary activity and cigarette smuggling. She was required to explain how she financed the purchase of six properties worth around £3.2 million in total

What Next For UWOs? | Kangs Financial Crimes Defence Solicitors

  • Despite only one UWO being deployed in the year of their creation, it is clear that they are now on the rise as the NCA has obtained three UWOs in close succession in May and July 2019 and has also set its sights beyond PEPs
  • Notably, the later UWOs have followed the High Court’s rejection of the legal challenge against the first use of UWOs in 2018. The High Court found that the UWO in that case did not violate the respondent’s property rights or her privilege against self-incrimination in respect of the risk of prosecutions abroad. Although that judgment is under appeal, it is likely that an emboldened NCA will continue to make increasing use of this new forceful weapon in its pursuit of the recovery of assets gained through criminal activity
  • Whilst the current focus is clearly on those with prime property in London, it is unlikely to be long before the NCA expands its horizons once more

How Can We Help? | Kangs National Financial Crime Defence Solicitors

Kangs Solicitors field a team recognised by both the Legal 500 and Chambers UK for its expertise in the defence of financial crime. The team is renowned for its expertise in assisting clients facing investigation in respect of a wide range of alleged financial impropriety.

The team is led by Hamraj Kang who is one of only two solicitors nationally to be awarded ‘star individual’ status for five consecutive years by the leading directory Chambers UK for his work in the area of financial crime and serious fraud.

If we can be of assistance, our Team is available via telephone 0333 370 4333 and by email info@kangssolicitors.co.uk.

We provide initial no obligation discussion at our three offices in London, Birmingham and Manchester.

Alternatively, discussions can be held virtually through live conferencing or telephone.

Hamraj-khan

Hamraj Kang

Email Hamraj

07976 258171

020 7936 6396

0121 449 9888

John Veale

John Veale

Email John

0121 449 9888

020 7936 6396

0161 817 5020

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Tim Thompson

Email Tim

0121 449 9888

020 7936 6396

0161 817 5020

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