An unexplained wealth order (UWO) is a type of court order issued by a British court to compel the target to reveal the sources of their unexplained wealth.[1] UWOs were introduced by sections 1–2 of the Criminal Finances Act 2017 and are governed by sections 362A–362T of Part 8 of the Proceeds of Crime Act 2002. Persons who fail to account are liable to have assets seized after an enforcement authority, such as the National Crime Agency (NCA), makes a successful appeal to the High Court.

The power of UWOs in fighting money laundering lies in their reverse onus principle,[2] however the orders are ineffective as soon as a defendant can provide an explanation for the source of their wealth. In the absence of evidence to the contrary, the defendant then wins the argument. Information obtained in the context of a UWO cannot be used in a criminal proceeding.[3] The statutory and regulatory scheme for UWOs is set out in paragraphs 11–18 of Hajiyeva v National Crime Agency [2020] EWCA Civ 108 (05 February 2020).[4]

Cases

The first two Unexplained Wealth Orders were issued in 2018 to Zamira Hajiyeva, the wife of Jahangir Hajiyev, the former chairman of the International Bank of Azerbaijan.[5] In February 2020, Hajiyeva lost her appeal against the NCA's bid to seize her London property. She was thus required to "provide the NCA with a full account of the sources of her wealth – including how she was able to buy her £15m home and the Mill Ride Golf Course in Berkshire".[6]

In May 2019, the NCA secured three further UWOs as part of an investigation into "London property linked to a politically exposed person believed to be involved in serious crime". The three properties, originally bought for more than £80m and held by offshore companies, were subsequently identified in an investigation by BBC News, Finance Uncovered and Transparency International into the ownership of London property by members of Kazakhstan's political elite.[7] Nurali Aliyev (Nursultan Nazarbayev's grandson) and his mother Dariga Nazarbayeva "have denied all wrongdoing – saying they can prove independent and legitimate wealth for their UK property investments".[8] On 8 April 2020, the High Court of Justice subsequently ruled that the case against the two be dismissed and that the properties be unfrozen "after they spoke more candidly about the sources and scope of their wealth".[9]

The first successful UWO was in October 2020 against Leeds businessman Mansoor Mahmood Hussain. Hussain, who had links to a convicted murderer, agreed to surrender 45 properties in his property empire to the NCA as well as other assets amounting to a total of almost £10 million.[10]

As of July 2020, the NCA is the only body to have secured UWOs. The Serious Fraud Office, HM Revenue & Customs, Financial Conduct Authority and Crown Prosecution Service have authority but have so far not used the legislation. At the same time it was reported that UWO investigations into “politically exposed persons” had proved much more difficult than the UK authorities had expected.[11]

British media sometimes refer to UWOs as "McMafia laws" after the McMafia crime drama series on British television and Misha Glenny's original book McMafia: A Journey Through the Global Criminal Underworld on organised crime.[12]

See also

References

  1. ^ Home Office (1 February 2018). "Circular 003/2018: Criminal Finances Act: unexplained wealth orders". GOV.UK. Her Majesty's Government. Retrieved 3 December 2020.
  2. ^ Clifford, Anita (28 July 2017). "New frontiers: Unexplained wealth, extraterritoriality and rights". www.lexology.com. Bright Line Law. Retrieved 3 December 2020 – via Lexology.
  3. ^ Marria, Vishal (25 October 2018). "How The Unexplained Wealth Order Combats Money Laundering". Forbes. Retrieved 31 October 2018.
  4. ^ Hajiyeva v National Crime Agency [2020] EWCA Civ 108 at para. 11–18 (5 February 2020), Court of Appeal (England and Wales)
  5. ^ Casciani, Dominic (10 October 2018). "Woman who spent £16m in Harrods revealed". BBC News. Retrieved 10 October 2018.
  6. ^ Casciani, Dominic (5 February 2020). "Woman in £16m Harrods spend loses wealth seizure challenge". BBC News. Retrieved 11 March 2020.
  7. ^ Casciani, Dominic; Eriksson, Christian; Swann, Steve (10 March 2020). "Unexplained Wealth Order focuses on London mansion". BBC News. Retrieved 11 March 2020.
  8. ^ "London Mansion Linked To Nazarbaev Family At Center Of British Court Battle". RFE/RL. 10 March 2020. Retrieved 11 March 2020.
  9. ^ Leonard, Peter (9 April 2020). "Kazakhstan: Nazarbayev wealth ruling dismays transparency campaigners". Eurasianet. Retrieved 9 April 2020.
  10. ^ Casciani, Dominic (7 October 2020). "Unexplained Wealth Orders: Suspected money launderer gives up £10m of property". BBC News. Retrieved 8 October 2020.
  11. ^ O’Neill, Sean (13 July 2020). "£1.5m legal bill forces rethink over McMafia wealth orders". The Times. ISSN 0140-0460. Retrieved 3 December 2020.
  12. ^ Menin, Anna (5 February 2020). "Woman who spent £16m in Harrods loses appeal against first 'McMafia' wealth order". City A.M. ISSN 2516-5445. Retrieved 3 December 2020.
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