Unexplained Wealth Orders
Chapter 1 of Part 1 of the Criminal Finances Act 2017 (‘CFA’) introduces the concept of ‘Unexplained Wealth Orders’ (‘UWO’) to the Proceeds of Crime Act 2002 (‘POCA’). The provisions of the CFA around UWOs came into effect on 31 January 2018 (Section 3 SI 2018/78).
Details of the new provisions
The new provisions (s362A-362T POCA) provide the opportunity for an ‘enforcement authority’ (defined as, the NCA, HMRC, the FCA, the SFO and the DPP/DPP for Northern Ireland - s362A(7) POCA)) to make an application to the High Court to issue a UWO in respect of ‘any property’. In order to make the application the ‘enforcement authority’ must specify or describe the property of which the order is sought and specify the person (‘the respondent’) the enforcement authority thinks holds the property (362A(2) POCA). A respondent may include a person outside the UK (362A(2)(a)).
In order to obtain the UWO, the ‘enforcement body’ must satisfy the Court that (s362B POCA):
the respondent holds the property and the value of the property exceeds £50,000;
there are reasonable grounds to suspect that the respondent’s known lawfully obtained income would be insufficient for the individual to obtain the property; and
the individual is a PEP or the individual (or a person connected to the individual) has been involved in serious crime.
If granted by the High Court, the UWO requires the respondent to set out the nature of their interest in the property subject to the UWO, explain how they obtained the property (including how any costs incurred were met), provide details of the settlement if the property is held in trust, and provide any other information requested relating to the property.
If the UWO is not complied with, without a reasonable excuse, then steps maybe taken to recover the property using powers under Chapter 1 Part 5 POCA (s362C POCA).
It is an offence to knowingly or recklessly make a false or misleading statement in response to a UWO. If found guilty of this offence a respondent may face up to 2 years in prison (s362E POCA).
The Court may make an interim freezing order in respect of the property subject to the UWO if the Court believes that there is a risk that a recovery order might be frustrated (362J POCA).
Comments
It remains to be seen just how the UWOs will be used and to whom they will be issued. The press coverage on the introduction of these provisions has tended to focus on ‘Russian oligarchs’ (http://www.independent.co.uk/news/uk/politics/oligarchs-corruption-unexplained-wealth-order-money-laundering-russia-ben-wallace-london-a8192401.html) whether that is a fair assumption or simply a response to the BBC’s McMafia, a rather thrilling drama relating to Russian gangsters in London, and Ben Wallace’s (the Security Minister) preoccupation with it, only time will tell.
Needless to say, anybody in receipt of such an order should seek appropriate professional advice immediately.
