The Criminal Finances Act 2017 came into effect in September last year. But one key aspect of it, unexplained wealth orders (UWO's) only came into force on January 31 this year.
UWO's are an attempt by the authorities to tackle the problem of money laundering in the UK. We may never know the exact scale of money laundering but estimates put it at around £90 billion a year in the UK.
UWO's can be used by the Serious Fraud Office, National Crime Agency, Crown Prosecution Service, Director of Public Prosecutions, HM Revenue and Customs and the Financial Conduct Authority. While UWO's are an understandable move to reduce the amount of money laundered, there are aspect to them which are cause for concern.
A UWO is an order of the High Court. It places certain requirements on the respondent that must be met within a certain amount of time. That amount of time is decided by the court.
Anyone who is subject to a UWO must:
- Disclose their exact interest in a particular property;
- Explain how they obtained the property;
- Gives details of any trust that a property is held in – and details of the trustees.
In simple terms, a UWO is a way for the authorities to put people they suspect of money laundering "on the spot'' by making them account for the source of their wealth.
It is worth noting, however, that a UWO can only be granted where an individual is a politically exposed person (or connected to a politically exposed person) from outside the European Economic Area or is suspected of being involved in serious crime. There must be reasonable cause to believe the individual holds property worth more than £50,000 and that their lawfully-earned income would have been insufficient to acquire the property.
A court may impose an interim freezing order in connection with the property. This prevents the individual (or anyone else with an interest in the property) doing anything with it until the proceedings have been completed.
If an individual fails to comply with a UWO without reasonable excuse, the property can be considered for civil recovery under Part 5 of the Proceeds of Crime Act 2002 (POCA). If an individual does comply with a UWO, the authorities have 60 days to decide what enforcement or investigations need to be taken regarding the property.
Enforcement of a UWO must be considered controversial, as it appears weighted against the individual. A UWO assumes that there has been criminal activity, which it uses as justification for the action against the individual. In the past, authorities may have struggled to prove the property was the proceeds of crime. With a UWO, the onus is on the individual to show that this was not the case. The burden of proof is now on the accused rather than the accuser.
It is a turning of the tables that makes it even more important that anyone suspected of money laundering seeks the right legal representation.
Supporters of UWO's make the case that they are necessary in order to stop people benefiting from the proceeds of crime.
But as UWO's are a civil law device rather than a criminal law one, the authorities only have to show that a crime was committed on the balance of probabilities rather than beyond reasonable doubt. This will surely skew the whole process in their favour.
The civil law has become a means by which the authorities can seize the assets, under POCA, of those it believes are involved in crime - without that person ever having been convicted of an offence. UWO's appear to be an extension of this use of civil law to take a person's wealth without proving any criminal behaviour.
Anyone faced with a UWO, therefore, must take the right steps in defence of their assets. Otherwise they could easily lose those assets without there being any proof of their guilt. In such circumstances, the right legal advice can be the difference between keeping your assets and having them taken without you ever having been proved to have done anything wrong.
Having experience in representing many clients facing restraint and confiscation orders, we can say with some authority that a robust, informed legal approach can ensure people that people retain what is rightfully theirs. It is understandable if people panic when faced with a UWO. But what they must do is find a legal representative with the relevant experience: someone who works regularly in the field of asset confiscation and restraint, who is used to dealing with the authorities who now have the UWO as a tool at their disposal. This can be the difference between a UWO being enforced or being thrown out or altered in the individual's favour.
The right legal expertise can provide a strong, informed challenge to the assumptions that have been made by the authorities when they look to bring a UWO against an individual. Such an approach is the only way to prevent the authorities using UWO's excessively.
If UWO's prove to be like restraint orders, we will see the authorities being quick to issue them. This can lead to mistakes and poor judgement. Such poor judgement can leave plenty of scope for challenging either the validity of a UWO or its precise terms. A successful challenge to either of these aspects of a UWO can make all the difference to an individual's ability to retain what is rightfully theirs.
The UWO is a new concept in UK law. But it is based on the age-old desire of the authorities to take the assets of those it believes have done wrong – often without the need to prove any guilt. And that is a concept that can be challenged successfully.
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.