Clause 1 of the Bill enables the NCA, HMRC, FCA, SFO or Director of Public Prosecutions to apply to the High Court for an “Unexplained Wealth Order” (UWO), which requires a property owner to explain their interest in certain property and how they obtained the funds to obtain that property.
An application for a UWO will only be successful if the High Court is satisfied that:
- the respondent to the application holds the property
- the property is worth more than £100,000
- there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient to enable the respondent to obtain the property, and
- either the respondent is a politically exposed person (PEP) or there are reasonable grounds to believe they are or have been involved in (or connected to someone involved in) serious crime.
At the same time as the application for a UWO, the enforcement authority can also apply for an interim freezing order in respect of the property.
If the Court makes a UWO, and the property owner fails to respond in the “response period” (any time period that the court decides), the property will be presumed to be recoverable in any subsequent enforcement action.
If the property owner does comply or purports to comply with the UWO, the enforcement authority may determine what, if any, enforcement or investigatory proceedings it wishes to take. There is no applicable time frame for doing so. However, if an interim freezing order is also in place, the enforcement authority has a 60 day period within which it must decide to pursue any enforcement or investigatory proceedings. If the agency decides to take no further action, it must notify the High Court, in which case the interim freezing order will be discharged.
It is a criminal offence, punishable by up to two years imprisonment, to make a false or misleading statement, in a material particular, when purporting to comply with a UWO.
Transparency International UK (TI) recommended the introduction of UWOs in connection with corruption, in a discussion paper published in May 2015. TI lamented that the UK framework for asset recovery was overly reliant on convictions in origin countries, and promoted UWOs as a tool for enforcement agencies to act on the large amounts of unexplained suspicious wealth entering the UK each year.
The Bill enables UWOs to be sought in broader circumstances than TI proposed. The unexplained wealth may have derived from any type of criminal offending - whether money laundering, drugs, or tax evasion - and UWOs may be sought not only against PEPs but also anyone who is believed on reasonable grounds to have current or past involvement in serious crime, or connection to someone with current or past involvement in serious crime. (Serious crime takes its definition from the Serious Crime Act 2007 and includes a wide range of criminal conduct).
We expect that there may be hundreds of assets in the UK that agencies strongly suspect to be the proceeds of criminal activity and could potentially be subject to UWOs (and interim freezing orders) if the Bill is passed. Inadequate responses to UWOs, or failures to respond at all, will be valued by law enforcement agencies in pursuing subsequent civil recovery processes.