UK: Are New Government AML/CTF Proposals A Step Too Far?

Last Updated: 11 May 2016
Article by Michael Roach


On 21 April 2016, the Government released its new Action Plan for anti-money laundering (AML) and counter-terrorist finance (CTF). The Action Plan contains a number of AML/CTF proposals on which the UK Government wishes to consult. Describing the Action Plan as representing the most significant change to the UK's AML/CTF regime in over a decade, the Government aims to send a clear message that the UK will not stand for money laundering or the funding of terrorism through its institutions1.

The Action Plan comes at a time when the UK's position in terms of combatting serious, global financial crime is high on the political agenda, given the recent release of the "Panama Papers" and the upcoming International Anti-Corruption Summit to be hosted in the UK in May. However, a number of the proposals appear to offend against basic legal principles and therefore warrant careful examination.

The Proposals

The Action Plan contains a total of 19 "actions", each comprising a number of proposals. The proposals range from fundamental reforms to the system of Suspicious Activity Reports to the creation of new regulatory powers and criminal offences.

This article will focus on what are arguably the three most contentious proposals: the creation of unexplained wealth orders (UWOs); the creation of a criminal illicit enrichment offence; and new powers to enable the forfeiture of money held in bank accounts.


UWOs are a form of non-conviction based asset confiscation. When served on a person suspected of having wealth or assets that represent the proceeds of unlawful activity, they essentially require the recipient to explain the origin of their assets. There appears to be no requirement that the recipient be subject to any sort of formal investigation or criminal proceedings. UWOs are a relatively recent development in confiscation and forfeiture jurisprudence, but they are already used in some countries, including Ireland and Australia. The Government states that UWOs could "provide critical information on which law enforcement authorities can build their case"2.

Linked to UWOs would be a new forfeiture power to enable the forfeiture of any assets for which a satisfactory explanation cannot be given.

The criminal offence of illicit enrichment

It is a requirement under the UN Convention Against Corruption (UNCAC) for states to consider introducing an illicit enrichment offence. The Government therefore intends to explore whether such an offence would be effective in the UK and compatible with the UK's legal system. "Illicit enrichment" is defined in the UNCAC as "a significant increase in the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income"3 and some countries have already criminalised such conduct.

While the Action Plan alludes to the offence being capable of commission only by public officials, it does not make this clear and so it may be that a wider application is being considered. In a number of countries that have already introduced an illicit enrichment offence (where it was typically introduced to target narcotics barons rather than corrupt politicians), the offence is universally applicable.

The main argument for such an offence is that it would make it easier for prosecutors to recover potentially ill-gotten gains by removing the need to establish that any crime had occurred or that identified assets were gained through criminal activity. All that prosecutors would be required to show is that the defendant had assets that exceeded those possible based on the person's legitimate source(s) of income. The Organization for Security and Co-operation in Europe considers the existence of such an offence to be one of the best practices for combatting corruption4.

New powers to enable the forfeiture of money held in bank accounts

The Proceeds of Crime Act 2002 (POCA) currently provides for effective action to be taken against criminal cash. However, the definition of "cash" does not include money held in bank accounts5. Money in bank accounts can be recovered via the civil recovery powers in POCA (which enable prosecutors to recover any form of property obtained through unlawful conduct), but the Government considers these civil recovery powers to be too complex and resource-demanding.

The Government therefore intends to explore whether new powers are needed to enable the forfeiture of money held in back 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 a suspicion that the funds are the proceeds of crime.

The Government also wants to explore whether, following an initial hearing at a Magistrates' Court, this new power could be used administratively. Such administrative forfeitures would be authorised by a senior law enforcement officer where the value held is below a certain limit (for example £100,000) and the case is uncontested.

The aim of these changes is to give law enforcement agencies the ability to obtain the forfeiture of money held in bank accounts more quickly and effectively.


Basic legal concerns

While the desire to tackle money laundering is admirable, the proposals outlined above raise some serious concerns regarding basic legal principles and guarantees.

For instance, UWOs and the illicit enrichment offence reverse the burden of proof onto the suspect. In doing so, they run contrary to the presumption of innocence, the privilege against self-incrimination and legitimate expectations with regards to fairness and due process. Certain suspects could well find themselves in a situation where they risk incriminating themselves by providing an explanation for their asset increase, or alternatively face forfeiture and/or a criminal conviction for illicit enrichment if they remain silent.

Analogies have been drawn between the UWO regime and the "section 2 powers" available to the Serious Fraud Office (SFO) pursuant to the Criminal Justice Act 1987, under which it can compel the provision of documents or information. However, it is hard to see how such an analogy can reasonably be drawn. In all cases aside from corruption, section 2 powers can only be used by the SFO after it has accepted a case for investigation. More crucially, section 2 powers are typically not used against suspects, and important protections apply in terms of the use to which any compelled information can be put (broadly speaking, no compelled statement can be used in criminal proceedings against the person who made it). In contrast, UWOs appear to be designed for use on suspects, and no equivalent protections are mentioned in the proposals.

The creation of a criminal illicit enrichment offence is designed to obviate the sometimes difficult prosecutorial hurdles of establishing that a substantive offence has occurred or that the identified assets were gained through criminal activity. In doing so, it would effectively criminalise the inability to provide an explanation as to a sudden increase in personal income or wealth. This is an unwarranted extension of the criminal law, as well as an unjustified intrusion into the private property rights of individuals.

The new powers to allow money in bank accounts to be forfeited are arguably the most intrusive, as the pre-emptive forfeiture of assets takes place before the suspect has even had an opportunity to explain potentially legitimate sources of wealth. Further, given the draconian nature of these proposed powers, it is concerning that on the current proposals they will only be subject to the judicial scrutiny by the Magistrates' Court.

The parameters of the UWO regime

Much is still to be decided as to the parameters of the UWO regime, including the proposed threshold test for issuing an UWO and what would constitute a "satisfactory explanation". In a recent report, Transparency International (TI) suggests that the civil standard of "arguable case" has considerable logic as a threshold test. It also suggests that a change in the threshold for non-conviction based asset forfeiture from "irresistible inference" to "reasonable cause to suspect" should be considered. However, the seizure of assets by the state is an extreme measure that should not be used unless absolutely necessary. The threshold is high for a reason.

It is also unclear what type of criminal activity would be captured by UWOs. TI has discussed the use of such orders in the UK as an anti-corruption tool, but they could theoretically be used against those suspected to have unexplained wealth derived from all types of criminal activity. Unless appropriate safeguards are put in place, there is a clear danger of UWOs being used to facilitate "fishing expeditions" into people's private financial affairs.


It may be that the tough-talking Action Plan is little more than a political reaction to recent events, at a time when the Government wants to show that it is taking steps to address global corruption and other serious crimes. Taken at face value, however, a number of the proposed measures are difficult to reconcile with fundamental principles of English law. The removal of the "presumption of responsibility" from the senior managers' regime provides a recent example of the resistance with which attempts to reverse the burden of proof are often met. It will therefore be interesting to see whether these proposals are eventually adopted and, if they are, whether they are adopted as currently envisioned and to what extent they will face court challenges.

The closing date for responses to the Action Plan is 2 June 2016, and the Action Plan aims to start having measures completed by July 2016. The Anti-Corruption Summit is set to begin on 12 May 2016, where it is expected that the Government will make further announcements about how the UK will tackle serious crime.



2 Ibid.

3 Art. 20 United Nations Convention Against Corruption:

4 Organization for Security and Co-operation in Europe. 2004. Best Practices in Combating Corruption:

5 S.289(6) Proceeds of Crime Act 2002

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.