The United Kingdom’s Unexplained Wealth Orders have so far failed to live up to the hype, argues Nicola Sharp
Introduced in the the United Kingdom’s Criminal Finances Act 2017 and praised as a vital new tool for the authorities in their efforts to tackle organised crime, hopes were high for Unexplained Wealth Orders (UWOs).
The UWO was, after all, a means for the National Crime Agency (NCA), Serious Fraud Office (SFO), Financial Conduct Authority (FCA), HM Revenue and Customs and even the Director of Public Prosecutions to freeze and possibly seize an individual’s assets if they were believed to have been obtained illegally.
The timely success of a TV drama about shady goings on led to UWOs being dubbed McMafia orders in the press. If there had been an orchestrated PR campaign to boost the profile of UWOs, it couldn’t have gone any better. By 2019, the NCA had let it be known that it was looking at more than 100 potential targets for UWOs. It was never likely that all of these would result in UWOs. And yet, so far at least, the UWO has done little to merit the enthusiasm of its advocates.
A UWO requires an individual to explain how they acquired a particular asset. If the explanation given is not considered satisfactory, the authorities can start civil recovery proceedings under the Proceeds of Crime Act to seize those assets without any civil or criminal proceedings having begun against a person.
“So far at least, the UWO has done little to merit the enthusiasm of its advocates.”
Individuals have to provide information about their assets without ever being convicted of wrongdoing or even charged. But despite the process being heavily weighted in favour of the authorities, UWOs have been a rare occurrence; having been used in just four cases by the end of last year. And the NCA is the only authority that has chosen to use them since their introduction.
They have been used nowhere near as frequently as most observers thought they would be. What should also be considered is the shaky start that the NCA has endured when it has come to using UWOs. While there have been some successes – and some very desirable McMafia-referencing press coverage to accompany them – there has also been failure.
The first UWO case, involving Zamira Hajiyeva, the serial big spender and wife of a jailed Azerbaijani banker, has so far gone to plan for the NCA. Hajiyeva failed to have the UWO discharged and late last year the Supreme Court refused her permission to appeal. Her response to the UWO will now determine whether civil recovery proceedings are brought. Last year also saw the NCA’s most notable UWO success to date, as a businessman with alleged criminal connections, Mansoor Mahmood Hussain, was unsuccessful in challenging a UWO and ended up surrendering assets with a total value of £10 million.
Yet 2020 also saw the High Court quashing UWOs that had been obtained by the NCA over real estate owned by Dariga Nazarbayeva, the daughter of Kazakhstan’s ex-president and her son. The NCA believed the property had been bought by Nazarbayeva’s former husband, who is a convicted criminal. But the court stated that the NCA’s assumption was mistaken and unreliable and that the agency had been wrong to serve the UWOs on a professional trustee and four overseas corporate entities that were the legal owners of the properties.
“The authorities may even come to see UWOs as a straightforward way of targeting smaller and less high-profile targets”
As track records go, the NCA’s use of UWOs is patchy. But despite this, we may well see greater use of UWOs in coming years. Like everything else, the work of the NCA (and any other agency that could use UWOs) has been disrupted by the pandemic. Covid-19 has seen investigations disrupted and delayed, which may mean more UWOs once normality resumes and investigations return to their pre-pandemic pace.
The authorities may even come to see UWOs as a straightforward way of targeting smaller and less high-profile targets than the Hajiyevas and Nazarbayevas of this world. This could result in many more UWOs being issued - albeit involving lower stakes – as the authorities look to take a steady, low-risk approach to using them.
There is also the likelihood that UWOs could be used more as a tool when an investigation gains momentum, even if this doesn’t result in confiscation. This would certainly be neither unusual nor improper: the Home Office’s own Code of Practice calls the UWO an investigation tool that is intended to assist in building evidence.
It would be wrong, therefore, to dismiss UWOs as a white elephant after only a few years. They have not yet matched the hype that surrounded their arrival and they have not been used enthusiastically by any agency other than the NCA. But there will be more of them in the pipeline sooner rather than later.
That will mean many more individuals having to account for their wealth. Such individuals should be looking to challenge the validity of any UWO they face. The NCA’s failings to date have shown that UWOs are not foolproof. Issues regarding who a UWO is issued to, when one can be issued and what constitutes a failure to comply with one could all prove fertile ground for a robust legal challenge to the authorities – if and when they decide to make greater use of such orders.
Nicola Sharp is a partner at Rahman Ravelli Solicitors
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