Unexplained Wealth Orders (UWOs) were introduced by the Criminal Finances Act 2017 which amended the Proceeds of Crime Act 2002 (POCA). The aim behind UWOs was set out in the legislation explanatory notes; to fill the lacuna in the POCA 2002 provisions and often meant enforcement authorities were unable to freeze or recover assets, even when they had reasonable grounds to suspect the identified assets represented the proceeds of crime, due to their inability to obtain evidence – often from overseas jurisdictions.
The Application
The following agencies collectively referred to as the “enforcement authority” in England and Wales are:-
- the National Crime Agency
- Her Majesty’s Revenue & Customs
- the Financial Conduct Authority
- the Serious Fraud Office, or
- the Crown Prosecution Service
The enforcement authority must specify or describe the property in respect of which the Order is sought from the person whom it thinks holds the property. Although the statutory use of the word “describe” suggests a degree of generality may be permitted. However, UWOs cannot be sought as a means of speculatively enquiring into a Respondent’s unidentified assets.
The 4 conditions which apply to the Application
Application is to the High Court in England and Wales, subject to the following 4 conditions:
Condition 1 – There is a reasonable cause to believe that the Respondent holds the property.
Condition 2 – There is a reasonable cause to believe that the value of the property is greater than £50,000; it is the value of the property and not the Respondent’s interest which must exceed £50,000.
Condition 3 – 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 obtaining the property; for these purposes the court will consider any mortgage or other security that it is reasonable to assume was or may have been available and assume the person obtained the property for market value.
Condition 4 – The Respondent is either:
- a Politically Exposed Person (PEP), i.e. entrusted with prominent functions by an internal organisation, a country other than the UK or other EEA states or is a family member of a close associate of such a person; or
- there are reasonable grounds for suspecting that the Respondent has been involved in a serious crime (which includes drugs and arms trafficking and money laundering or a person connected with the Respondent)
The Statement
On application, if the court is satisfied that these conditions are met, may issue the UWO and contemporaneously issue an Interim Freezing Order (IFO) if it considers it necessary to avoid the risk of any recovery order being made being frustrated.
If the court makes a UWO, the Respondent is required to provide a statement in response:-
- setting out the nature and extent of the Respondent’s interest in the property
- explaining how they obtained the property
- setting out details where the property is held by the trustee of a settlement;
- setting out such other information in connection with the property as may be so specified.
Consequences of compliance
If an IFO is in place, the enforcement authority must determine what enforcement or investigatory proceedings it considers ought to be taken within 60 days of compliance or purported compliance with the UWO. If no further proceedings are to be taken, the High Court must be notified within the 60 day time frame. An initial decision not to pursue proceedings does not prevent proceedings being recommenced on any future date, even on the same information.
Challenge to UWOs
UWOs will inevitably be subject to a raft of individual challenges, both procedurally and substantively. Most evidently any Respondent will seek to satisfy the relevant enforcement authority and court that they have sufficient lawful assets to have enabled them to obtain the property in question. The ownership and value of property will inevitably need to exceed more than £50,000.
We undertake to advise at an early stage and to enable a client to collate and compile evidence of compliance to show the providence and legitimacy of the asset.