Unexplained Wealth Orders – what are they and when are parties at risk?
The Criminal Finances Act 2017 resulted in further powers for investigatory bodies to investigate individuals, one of which, the power to obtain an…
The Criminal Finances Act 2017 resulted in further powers for investigatory bodies to investigate individuals, one of which, the power to obtain an Unexplained Wealth Order (“UWO”), came into force on 31 January 2018.
This power, which has already been exercised by the National Crime Agency (“NCA”) in two recent cases involving politically exposed persons, enables certain agencies to apply to the Court for an order requiring a person to explain the source of their assets.
This is a significant new development which could affect a large proportion of the population.
Such UWOs are now being obtained in the High Court where:
- It appears that a person’s wealth is incompatible with their income;
- It can be shown that there are reasonable grounds for believing that a person holds an asset that is greater in value than £50,000;
- It can be shown that the person’s legitimate income is insufficient to enable the person to obtain such asset; and
- The person is either a politically exposed person (being an individual who has a public function in an international organisation or foreign state, any family member or close associate of, or a person otherwise connected with, that person for tax purposes), or that there are reasonable grounds for suspecting that the person is involved in serious crime or has been so involved.
Failing to provide an adequate explanation in responding to an UWO means that there is a presumption that the asset is recoverable property. That means that the asset can be the subject of a civil recovery order in the High Court. If a civil recovery order is made, not only will the person holding it lose possession of the asset but, if not already commenced, a criminal investigation could be brought against the person holding the asset.
The relatively low value criterion means that a large section of society could now be affected by an UWO.
Expectations are that UWOs will be used widely by investigatory bodies given the broad scope of this power and the sanctions available for non-compliance.
Add to that the possibility of assets being frozen when an UWO is made, and the impact that this power could have in practice on people who are not necessarily very rich, but who by reason of their status and who hold moderate assets, is easy to see. Put to one side human rights challenges of course.
The recent action taken by the NCA is a good example of how this power will be used in the future. Individuals who could be affected not only need to be aware of this new power and its effect but also need to know how to challenge it when affected.
If you would like to discuss further, please contact Euros Jones, Partner and Head of Weightmans’ Business Crime Unit (email@example.com).