It has not taken long for the UK’s
Criminal Finances Act 2017 to make an impression. Since its provisions on unexplained wealth orders (UWOs) came into force in January 2018, it has led to countless news reports, many of them focused on one particular high-profile
court case.
The government’s motivation for passing the Act was the need to clamp down on money laundering and clean up London’s reputation as an international financial centre. In 2017, the anti-corruption group Transparency International UK said it had identified £4.4bn worth of property in the UK that had been bought with ‘suspicious wealth’ and it says much of this could now be the subject of UWOs.
UWOs are not the only important element of the Act, but they appear to be the best known. The first two UWOs were served in February 2018, when the National Crime Agency (NCA) successfully applied to the High Court to issue orders relating to £22m worth of property in London and Berkshire owned by Jahangir Hajiyev, a former chairman of the International Bank of Azerbaijan, and his wife Zamira.
How UWOs workAlong with the NCA, a limited number of authorities can apply for a UWO, including Her Majesty’s Revenue and Customs (HMRC), the FCA, the Serious Fraud Office and the Crown Prosecution Service. The orders themselves can only be issued by the High Court (or the Court of Session in the case of Scotland) and are designed to be used when there are suspicions about how someone acquired property.
They can be issued against two groups of people: someone who is suspected of being involved in a serious crime (or is connected to someone involved in such a crime); or a politically exposed person, such as a politician, entrusted with prominent public functions, or their family members or close associates.
The scope of the law is wide. In theory, a UWO can be issued against any person anywhere in the world and in relation to any asset worth at least £50,000. A key consideration is whether the target’s known legitimate income appears sufficient to have acquired the asset in question. It does not matter whether the property was acquired before or after the law came into force.
Failure to cooperate with a UWO without a reasonable excuse creates a presumption that the property has been acquired nefariously and it can then be seized under the
Proceeds of Crime Act 2002. In addition, although the UWO is a civil power, anyone who knowingly makes misleading or false statements in response to a UWO is committing a criminal offence and could face up to two years in jail.
In contrast to UWOs, which are served on an individual suspect, account freezing orders are directed at institutions that hold a suspect’s accounts. These orders expand the police’s existing cash seizure powers into other areas such as bank and building society accounts. Previously, the authorities would have to apply to a Crown Court before making such a move, but the 2017 Act means they can instead go to a magistrates’ court. Importantly, the legal threshold they have to reach is also now far lower.
The full version of this article is published in the Q1 2019 print edition of The Review. All members, excluding student members, are eligible to receive the quarterly print edition of the magazine. Members can opt in to receive the print edition by logging in to MyCISI, clicking on My account, then clicking the Communications tab and selecting ‘Yes’.
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