End of the road for the NCA in NCA v Baker

25 June 2020

In our previous blog, ‘Unexplained Wealth Orders: An overview of the regime to date’ we considered the challenges faced by the NCA in their efforts to use the relatively new statutory tool of Unexplained Wealth Orders (UWOs). Unfortunately for the NCA, one of the four cases they have focused their efforts on since its introduction has now been unequivocally lost.
 

In May 2019 the High Court granted three UWO’s in respect of London property worth £80 million which the NCA alleged had been acquired by the late Mr Rakhat Aliyev as a means of laundering the proceeds of unlawful conduct. These UWOs and related interim freezing orders were subsequently discharged on 8 April this year by Mrs Justice Lang who found that, in respect of certain aspects of their case, the NCA’s underlying assumptions were ‘unreliable’  and their reasoning ‘artificial and flawed’. As one of the first test cases under the UWO regime, the NCA would have felt obliged to and did appeal this ruling, with the NCA’s Director General of the National Economic Crime Centre explaining ‘these hearings will establish the case law on which future judgments will be based, so it is vital that we get this right.’

By written order of 17 June, the Court of Appeal has now refused the NCA’s application for permission to appeal the discharge of the UWOs in this case. Their application was determined on the papers and without an oral hearing which means the decision is final and cannot be further reviewed or appealed (save in exceptional circumstances). The Rt. Hon. Lady Justice Carr explained that the NCA faced an uphill battle because in order to succeed they would have to persuade the Court of Appeal to disagree with Mrs Justice Lang’s findings in the High Court in relation to each statutory requirement; it would not be sufficient to overturn one finding in isolation because the legislation requires that all conditions be met before a UWO can be granted.

In the absence of an oral hearing and published written judgment, the specific details of the NCA’s arguments to the Court of Appeal are not clear and the Rt. Hon. Lady Justice Carr declined to offer further judicial interpretation because the case did not offer ‘any real prospect of success.’ The NCA’s approach in this case was flawed from the outset, the judgement says, in that it focused on the complex but legitimate offshore structures used to transfer and hold the properties, how they were managed and by whom as evidence of illegal activity. This single minded approach meant the NCA failed to properly consider the ‘obvious lines of enquiry’ at the beginning and they failed ‘to carry out a fair-minded evaluation’ of information voluntarily disclosed to the NCA in the course of the proceedings.

Doubtless the NCA will reflect carefully on this case and this ruling: it reflects strong judicial criticism of the agency’s approach to the use of UWOs on this occasion and this public admonishment by the courts will be both embarrassing and extremely expensive – the NCA will have to bear its own and the other side’s costs, who are seeking to recover £1.5 million. This represents a huge financial blow for the NCA who will not have budgeted for costs on this scale and it is likely to impact their plans and risk appetite going forward. Whilst the official line may be that “the NCA will continue to use all the legislation at our disposal to pursue suspected illicit finance”, the agency will consider carefully how best to approach similar cases in the future to avoid a repeat of this debacle.

Further information

If you are affected by a UWO or an Account Freezing Order - and we anticipate that ever increasing numbers of individuals will be so affected in the coming months and years - it is critical to obtain specialist legal advice at the earliest possible opportunity. Deciding on the appropriate strategy at the outset will maximise the chances of a positive outcome. Our team of asset forfeiture and proceeds of crime lawyers have extensive experience of challenging these orders and of engaging effectively with law enforcement and the courts.

For more information on UWOs please see our related blogs here.

 

About the authors

Jonathan Grimes is a Partner in the Criminal Litigation Department who specialises in serious and complex criminal cases. He represents individuals and organisations in all areas of financial services and business crime as well as health and safety and related areas. He has acted in numerous cases involving allegations of financial wrongdoing and has experience of investigations by SFO, FCA, HMRC, CMA, NCA and the police as well as a number of foreign investigative authorities. He has particular expertise dealing with law enforcement applications that seek to freeze or seize assets, including Account Freezing Orders and other applications made under the Proceeds of Crime Act (POCA). He frequently gives advice on money laundering issues including on the making of suspicious activity reports (SARs).

Ed Smyth is a Senior Associate in the Criminal Litigation Department and represents individuals and corporates involved across the full spectrum of criminal and quasi-criminal matters. He has considerable experience of confiscation and asset forfeiture proceedings and of challenging the exercise of search and seizure powers. He has acted in cases involving the SFO, the NCA, HMRC, the Information Commissioner, the Electoral Commission and various professional disciplinary bodies.

 

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