The Serious Fraud Office (SFO) has obtained its first ever Unexplained Wealth Order (UWO) in relation to a property valued at £1.5m. This success may increase the SFO's appetite to deploy UWOs as part of its investigations.
UWOs can be used by enforcement agencies to require respondents to explain the origin of assets where there are reasonable grounds for suspecting that those assets appear disproportionate to the respondent's income; or (since 2022) that they have been obtained through unlawful conduct. The UWO in this case was obtained against the ex-wife of Timothy Schools, who has been convicted for his role in a fraudulent scheme in which investors lost an estimated £100m.
We have previously commented on the use of UWOs by the National Crime Agency (NCA). To date, the NCA has been the enforcement agency to make most use of this tool, albeit with mixed success. Following initial success, the NCA was left with significant costs exposure in the case of Baker in 2020, in which three UWOs were discharged. Baker demonstrated the substantial risks facing enforcement agencies if UWOs were pursued unsuccessfully, likely serving as a deterrent to effective usage. As a result, there was a notable reduction in their use from 2020 onwards. However, last year we saw evidence that the successful use of UWOs was starting to make a comeback. The NCA obtained its first UWO in Northern Ireland and also separately concluded a six-year investigation that began with a UWO and culminated in the forfeiture of two high value properties.
The UWO obtained by the SFO is a continuation of the trend from last year, suggesting a consistent increase in the use of UWOs. This is likely to be a consequence of reforms under the Economic Crime (Transparency and Enforcement) Act 2022, designed to benefit enforcement agencies. Those reforms introduced cost protections for enforcement agencies pursing UWOs; allowed enforcement agencies to apply to the High Court for more time to review information provided by respondents; and also created the alternative test for UWOs to be granted where the Court is satisfied that the relevant assets have been obtained through unlawful conduct.
This an important legal success for the SFO and a milestone in demonstrating both its efficacy under Nick Ephgrave's tenure and its appetite to use the wide range of tools available to it for enforcement. We expect to see this trend continue, with an uptick in further UWOs, both from the SFO and from other enforcement bodies.
Nick Ephgrave, SFO director, said: "This is a milestone case for the SFO [...] Wherever criminal assets have been hidden or dispersed, we will progress our investigations with determination and explore new methods to recover funds for victims and the public purse."
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