Unexplained Wealth Orders

A UWO is a civil investigatory tool available to an enforcement agency, most notably the NCA. It does not in itself lead directly to recovery action.

A UWO is an Order of the High Court which requires an individual, company or trust (‘the respondent’) to provide a statement explaining:

• The nature and extent of their interest in any particular property, and
• How the respondent acquired the property

The respondent is usually targeted with a Unexplained Wealth Order when the value of property in their control appears to be disproportionate to their known income.

The potential respondents can be categorised into four main groups as follows:

PEPs

• A PEP is ‘an individual who is, or has been, entrusted with prominent public functions by an international organisation or by a State other than the UK or another EEA State’
• An application for a Unexplained Wealth Order against a PEP does not require suspicion of serious criminality

Individuals Connected to a Respondent who is a PEP

These include:

• Any close ‘family member’ (spouses, parents, siblings, children)
• Any ‘close associates’ or persons ‘connected to’ which can include business associates of the PEP and those that are co-owners of assets with the PEP

Suspected Serious Criminals

• The High Court must be satisfied that serious crime has been committed which includes offences such as fraud & tax offences, bribery & corruption, arms trafficking, drug trafficking and money laundering
• There is no need to prove to the criminal standard, of ‘beyond reasonable doubt’, that the respondent (or anyone connected to him) is involved in serious crime

Individuals Connected to a Respondent Suspected of Serious Crime

These are likely to include:

• Close family members of the respondent
• Business associates of the respondent
• Joint asset holders with the respondent

The following enforcement and investigating authorities are entitled to apply for UWOs:

• The NCA
• HMRC
• The FCA
• The SFO
• The Director of Public Prosecutions (England & Wales)

It is for the respondent to prove that the property was obtained by legitimate means such as a legitimate inheritance or acquired using legitimate income.

Usually, it is for the State to prove matters but for Unexplained Wealth Orders the burden of proof has been reversed thereby placing the onus entirely on the respondent to prove the case on ‘a balance of probabilities’.

The prosecuting authority must satisfy the High Court of a number of matters before a Unexplained Wealth Order will be granted including:

1. The respondent holds the property
2. The value of the property is over £50,000 and
3. There are reasonable grounds for suspecting that the known sources of the respondent’s lawful income are insufficient to have enabled the respondent to obtain the property

In addition to the above, the High Court must be satisfied that:

4. The respondent is a Politically Exposed Person (PEP), or a ‘family member’, ‘close associate’ or ‘otherwise connected to’ a PEP

OR

5. There are reasonable grounds for suspecting that the respondent (or someone ‘connected to the respondent’) is, or has been, involved in serious crime in the UK or overseas

Section 362I of POCA details the procedure for the prosecuting authority (usually the NCA) to follow when making an application to the High Court for a Unexplained Wealth Order.

• The application is usually made to a High Court Judge without notice to the respondent in order to prevent the dissipation of property
• The respondent can be an individual, company or trust
• The UWO applies to worldwide assets to include property and money
• The respondent does not need to be resident or present in the UK as long as the respondent can be shown to be in control of the property

Interim Freezing Orders

An Interim Freezing Order is generally sought by the enforcement agency at the same time as the UWO. The Interim Freezing Order has the effect of freezing the worldwide assets of the respondent.

The respondent has the right to apply for a variation of the Interim Freezing Order to deal with the property as well as to access frozen assets for the purposes of legal expenses and/or living expenses.

If a High Court Judge is satisfied on hearing the application from the enforcement agency that there are reasonable grounds for a UWO to be granted, the UWO must include the following in order to be valid:

• The name of the respondent
• The property in question must be specified in the order
• The form and manner in which the respondent is to provide the information must be specified in the order
• Who the respondent must give the explanation to, and
• The time period for providing the explanation

The respondent must comply with the Unexplained Wealth Order (UWO), including the requirement to provide any disclosure and explanation requested, within the time frame specified.

The respondent (and the enforcement agency) is entitled to make an application to vary or discharge the UWO pursuant to section 362I (4) of POCA.

If the respondent complies with the UWO within the specified time limit, the NCA or other enforcement agency must consider the reply from the respondent in order to decide if any further action should be taken, such as a further UWO or to seek a Civil Recovery Order under Part 5 of POCA.

The information obtained by the enforcement agency under a UWO cannot be used in criminal proceedings against the respondent, although there are certain exceptions to this general rule of protection.

However, the enforcement agency can use any information disclosed to it in response to a UWO and proceed to share this information with other national and international law enforcement agencies.

This intelligence gathering can also impact on third parties who may have featured in any response from the respondent in that it may lead to a civil or criminal case being instigated against them.

Failure to comply with the Unexplained Wealth Order can include:

• The respondent failing to comply with the terms of the UWO at all, or
• The respondent, without reasonable excuse, failing to provide within the specified time limit the documents, material and information specified in the UWO, or
• The respondent, without reasonable excuse, providing only evidence that is deemed to be unsatisfactory

Failure to comply with the UWO will result in the presumption that the property concerned is ‘recoverable property’ for the purposes of civil recovery proceedings. This presumption can be rebutted in the civil recovery proceedings.

Recoverable property means that the property has been obtained through unlawful conduct.

The respondent commits a criminal offence if, in purported compliance with the Unexplained Wealth Order, a false or misleading statement is made to the enforcement authority.

If the respondent knows the statement to be false or misleading or recklessly makes a statement that is false or misleading in a material way, criminal sanctions could follow.

The offence is punishable by a maximum sentence of two years imprisonment.

If the enforcement agency suspects that the respondent has knowingly or recklessly provided material that is false or misleading in a material way, it may choose to bring contempt of court proceedings in the High Court which can also lead to a custodial sentence.