Home Office desire for new anti-money laundering powers ahead of Anti-Corruption Summit

With just over two weeks to go until the Prime Minister’s Global Anti-Corruption Summit, the Home Office announced plans on 21 April to make the UK a more hostile environment for people seeking to move, hide or use the proceeds of crime or corruption.

Action Plan for anti-money laundering and counter-terrorist finance

Theresa May set out proposals for updating our anti-money laundering laws, which include options for new legal powers:

• Assessing whether new powers are needed to enable the quick and effective forfeiture of money held in bank accounts in cases where there is no criminal conviction against the account holder (because, for example, the account was opened under a false identity) and there is suspicion that the funds are the proceeds of crime;
• The introduction of Unexplained Wealth Orders (UWOs) requiring defendants to explain and account for the origin of their assets;
• Assessing whether a new forfeiture power should be created to enable the forfeiture of any assets for which a satisfactory explanation cannot be given to the court;
• Consideration of an illicit enrichment offence.

Unexplained Wealth Orders (UWOs)

UWO’s would enable UK investigators to get behind the ownership of assets that are out of line with an individual’s lawful income.  They will be able to question individuals in relation to “unexplained wealth” and to use that information to support civil recovery proceedings against such assets, even where there is no proof to a criminal standard that the asset in question is connected to a crime.
Read more on the development of UK UWOs.

Property in the UK owned by offshore companies

The Government announced in November 2015 that all UK companies would be forced to reveal their ultimate owners under new plans for a register of beneficial ownership by June 2016. Other EU countries are also due to implement central registers of corporate beneficial ownership by 2017. However, NGOs, including Transparency International had hoped for a similar register for transparency of ownership of UK properties held by non-UK companies.

According to Transparency International, at least 36,000 London properties are owned by offshore companies. Other reports estimate the value of holdings in British property at £170 billion.

The Government issued a discussion paper on transparency of beneficial ownership recently, with a proposal for foreign companies to provide their beneficial ownership information when either purchasing property or bidding for public contracts. The Government is currently analysing the responses to that paper and in the current climate it is likely that there will shortly be legislative proposals for change.

Any Cause for Concern?

As noted here in September 2015, the same concerns exist today following the Government’s announcement. Tackling corruption and money laundering is admirable and necessary, however the new proposed powers in relation to UWOs and a new forfeiture power can be viewed as worrying examples of state interference with the property rights and privacy rights of individuals, and will need to be introduced with some care.

The Anti-Corruption Summit is set to begin on 12 May 2016 when it is expected that further announcements dealing with unexplained wealth from corruption will be forthcoming.