BCL partners Michael Drury and John Binns write for Money Laundering Bulletin discussing the recent case of NCA v Baker, the first negative result for the authorities in the still-nascent regime of Unexplained Wealth Orders, and what this means for future cases.

Here's an extract from the article:

The UK's National Crime Agency (NCA) has suffered a serious defeat in its use of Unexplained Wealth Orders (UWOs), in the case of NCA v Baker, in which it was recently refused permission to appeal, and reportedly suffered a very painful heavy costs award against it, given that these are civil proceedings, in which 'costs follow the event'. The case illustrates the complex issues involved in working with the Proceeds of Crime Act 2002 (POCA) and may prove a decisive moment in the NCA's strategy to pursue assets it regards as 'suspicious'.

UWOs' role and context

By way of background, a UWO is not an end in itself. Its purpose is to support a scheme of civil recovery under POCA, by which assets can be frozen and forfeited if the High Court finds, on the balance of probabilities, that they represent the proceeds of 'unlawful conduct'. The authorities bringing the case need not specify the precise conduct involved, although they do need to specify the type of conduct, and where it occurred overseas, prove both that it breached the laws of that jurisdiction and that it would also breach the laws of the UK, if it occurred here.

This contrasts with the principal money laundering provisions of POCA, by which a person can be tried and convicted if a jury is satisfied, beyond reasonable doubt, that they have dealt with the proceeds of 'criminal conduct' applying, this time, only UK laws, where they know or suspect that this is so. One way of proving that such conduct occurred is to invite an 'irresistible inference' from the way the property, said to represent its proceeds, was handled.

'Reasonable grounds for suspecting'

In the context of the reporting obligations of the regulated sector under POCA, this idea of drawing inferences from the way property is handled – for instance, in the use of complex offshore structures, which may be used to disguise its criminal origin – has some resonance, in the test of 'reasonable grounds for suspecting' that a person is money laundering.

In the context of investigative powers under POCA, including UWOs, that same test of 'reasonable grounds for suspecting' is applied, for instance where the High Court considers the sufficiency of a respondent's 'lawfully obtained income' (applying the laws of the jurisdiction where it was obtained) to have obtained a property under UK investigation, and his involvement in or connection with 'serious crime' (applying, broadly speaking, UK laws).

This article was originally published by Money Laundering Bulletin on 10/08/2020. You can read the full article by logging into their site, or by pdf here.

Originally published August 10, 2020.

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