The NCA finally obtains the benefit of Unexplained Wealth Orders
Chambers and Partners, 2019
Unexplained Wealth Orders (UWOs) were introduced to bolster the Proceeds of Crime regime by extending the powers of law enforcement agencies to seize assets suspected of representing criminal property.
UWOs require an individual or respondent party to prove that a particular asset was obtained through legitimate means.
The wide range of parties that can be targeted by UWOs, the reverse burden of proof that applies and the pressure on UK authorities to be seen to do more to stamp out suspected dirty money, means that many people may find themselves fighting to retain their assets.
UWOs are High Court orders that can be sought by the Serious Fraud Office (SFO), National Crime Agency (NCA), HM Revenue and Customs (HMRC), Crown Prosecution Service (CPS) and Financial Conduct Authority (FCA) in respect of assets valued at more than £50,000 – where there are reasonable grounds for these authorities to suspect that the asset was purchased with funds of illegitimate provenance. Crucially the onus is on the respondent to prove otherwise.
A UWO can be made against a politically exposed person (PEP) or individuals suspected of being involved in serious crime (fraud, tax evasion, money laundering and so on) in the UK or elsewhere, as well as those associated with them, be they business associates or family members. Companies can also be the subject of a UWO whether the company is registered in the UK or abroad.
There are potentially dire consequences for parties targeted by a UWO, so speed and effectiveness of response are of the essence.
Our expertise includes:
Sometimes the prosecuting authority may seek an interim freezing order over the asset in question before a proper response to the UWO has been given. See our expertise in this area.
Failure to respond satisfactorily to a UWO may give rise to a presumption that the asset is recoverable by means of civil forfeiture. False or misleading statements may also constitute a separate criminal offence, punishable by imprisonment.
We understand this process can be stressful and have the right experience to bring matters to their proper conclusion in our clients’ best interests.
We act for all parties who may need to challenge a UWO - both individuals and companies – and where there are third party considerations.
We have also acted for those who fear they may be at risk of a UWO-based investigation and advised on preventative measures to ensure parties can successfully demonstrate the legitimate provenance of their assets.
If you are concerned that you, a family member or someone you advise might be at risk of investigation by a prosecuting agency with the power to obtain a UWO, please contact our specialist lawyers.
For more information please contact our specialist UWO solicitors.
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The NCA will be pleased as punch with the highly publicised outcome of their investigation into the businessman Mansoor Hussain; using several of the tools at its disposal, the agency has agreed a settlement with Mr Hussain that will see him relinquish ownership of numerous properties, assets and cash to the amount of £9,802,828. All on the basis of his alleged links to serious organised crime in the UK but without the need for any criminal proceedings.
The SFO has followed in the footsteps of the NCA and HMRC by using, for the first time, a listed asset order (‘LAO’) to recover £500,000 worth of jewellery which they were satisfied represented the proceeds of crime.
In the Home Secretary’s foreword to the National Crime Agency’s Annual Report 2019-20, she details the “NCA’s relentless mission to end the very worst criminality” and the report cites the categories of Serious and Organised Crime (SOC) that “destroy lives” including: child sexual abuse; modern slavery and human trafficking; organised immigration crime; cybercrime; fraud; money laundering; bribery and corruption; and, sanctions evasion.
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.
Unexplained Wealth Orders (UWOs) were introduced pursuant to the Criminal Finances Act (CFA) 2017 in order to bolster the UK’s proceeds of crime regime and they have been the subject of much media attention because of the vast sums of money and high value property involved. The NCA and other law enforcement agencies have now had over two years to avail themselves of this investigatory tool and in this blog we consider the challenges that have arisen and what lessons have been learnt to date.
In a significant decision, on 8 April 2020, the High Court discharged three Unexplained Wealth Orders (UWOs) following applications by the respondents to those orders. This is the first time the High Court has acted to discharge such orders. The National Crime Agency (NCA) has already indicated its intention to appeal.
The NCA announced on 13 February that it had obtained a freezing order preventing the sale of 17 addresses as part of an on-going investigation into a Leeds businessman with suspected links to serious organised criminals. It confirmed that the Property Freezing Order (PFO) covers properties in Leeds, Cheshire and London worth approximately £10.5 million, which are under the control of 39-year-old Mansoor Mahmood Hussain.
The NCA announced on Monday 13 January that it has obtained an Account Freezing Order (AFO) over funds in excess of £1m related to businessman Mansoor Mahmood Hussain alleged to be connected to organised crime and in respect of whom the NCA had already secured an Unexplained Wealth Order (UWO) in July 2019. It is clear that law enforcement agencies’ appetite to deploy these draconian orders is growing.
On 12 July, the Home Office published its new Asset Recovery Action Plan (“the Plan”) to complement the National Economic Crime Plan 2019 to 2022. In it, the government expresses its clear intention to attack criminal finances still more robustly and to hit hard at the “common thread that runs through almost all offending” – money. The Plan continues: “The vast majority of criminality is driven by money, so it is vital that we are relentless in our pursuit of the illicit finances that criminals acquire to fund their criminal lifestyle and commit further crime…”
The National Crime Agency (NCA) continues to deploy Unexplained Wealth Orders (UWOs) as a means to tackle illicit finance – now, as anticipated, it has turned its focus on serious organised crime.
The National Crime Agency announced last week that it has secured three Unexplained Wealth Orders as part of its investigation into London property linked to “a politically exposed person believed to be involved in serious crime.” We are told that the UWOs are for three residential properties in prime locations – originally bought for more than £80m and held by offshore companies.
The Unexplained Wealth Order (UWO) has been available to law enforcement since February 2018. UWOs are intended to bolster the Proceeds of Crime regime, by making it easier for law enforcement agencies to seize assets suspected of representing criminal property.
Further developments in the first (so-called) “McMafia” case (see my related blog Media focus on first 'McMafia law' challenge) were reported yesterday when the National Crime Agency (NCA) secured the seizure of a “high value Cartier diamond ring”.
Whether you can prove the legitimate provenance of all of your significant assets is a question an increasing number of people may have to start asking themselves. In the last week, the High Court has dismissed an appeal to discharge the first Unexplained Wealth Order (‘UWO’) brought by the National Crime Agency (‘NCA’).
Media reports today focus on the first challenge to the Unexplained Wealth Order with headlines such as: “Harrods big spender fights to keep mansion” (BBC News) referring to the case before the High Court on 25th July where “Mrs A” sought to discharge an Unexplained Wealth Order (UWO) obtained by the NCA against her husband, “Mr A”, in respect of two UK properties with a combined value of £22 million. The NCA alleges that Mr and Mrs A obtained their wealth through foreign corruption.
Unexplained Wealth Orders (UWOs), first ratified in the Criminal Finances Act of April last year, are now in force meaning UK law enforcement agencies have a new tool at their disposal to help fight organised crime. Media reports have cited 'fishy millionaires', the wealth of corrupt overseas politicians and the properties of oligarchs as the intended targets. In practice however UWOs can be applied to any asset over £50,000 where there are reasonable grounds for suspecting dirty money is involved. Accountants, tax advisers and private wealth managers therefore need to understand how UWOs work and why their clients, innocent or otherwise, might be at risk.
In the Government Anti-Corruption Strategy 2017-22 Unexplained Wealth Orders were cited as one of the key tools to ensure a more robust response to tackling economic crime. “Goal 2” of the strategy is to achieve stronger law enforcement, prosecutorial and criminal justice action.
The Government is taking a tough stance against corruption both internationally and at home. Speaking after the FIFA scandal, David Cameron described corruption as “the cancer at the heart of so many of the problems we face around the world” and named Sir Eric Pickles as his “Anti-corruption Champion”.
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