Section 1 of the Criminal Finances Act 2017 added a new investigative tool to the Proceeds of Crime Act 2002 (sections 362A to 362I)(“the Act”). The new measure, known as an ‘unexplained wealth order’ is available, on application to the High Court, to the National Crime Agency, HMRC, the FCA, the Director of the SFO and the DPP.
The power to obtain an unexplained wealth order came into force on 31 January 2018.In a press release on 28 February 2018, the NCA (represented by Jonathan Hall QC in the High Court) announced that it had secured unexplained wealth orders over two properties, one in London and one in the South East of England.
The High Court also made interim freezing orders (see section 362J of POCA) meaning that the assets cannot be sold, transferred or dissipated for the duration of the order.
The NCA announced that it had obtained the orders “to investigate assets totalling £22million that are believed to ultimately be owned by a politically exposed person…”.
A ‘politically exposed person’ is an individual (or their family members, close associates or persons ‘otherwise connected’ with them) 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.
Unexplained wealth orders are only available over property held by a person who the court is satisfied is either ‘politically exposed’, or against whom there are reasonable grounds for suspecting that he, or a person ‘connected with’ him, is involved in or has been involved in ‘serious crime’ in the UK or elsewhere (as defined by Part 1 and Schedule 1 of the Serious Crime Act 2007 – see section 362B(9) of the Act).
UWOs can be made over property (worth more than £50,000) where there are reasonable grounds for suspecting that the known sources of lawful income of the person holding the property would have been insufficient for the purposes of enabling that person to obtain it.
The effect of the order is to require the respondent to provide a statement, setting out the nature and extent of the respondent’s interest in the property; explaining how he obtained the property (including how the costs of obtaining it were met); setting out the details of any trust settlement; or setting out other information in connection with the property as specified by the order. The order can also require the respondent to produce relevant documents.
UWOs are clearly intended to allow the UK authorities to investigate money laundering, particularly through real estate purchases. The orders are not sanctions or penalties in their own right. Rather they are designed to obtain information to decide whether further criminal or civil enforcement is required under POCA or otherwise. The enforcement agency has 60 days from compliance or ‘purported compliance’ with the order to decide what enforcement or further investigatory steps are to be taken.
It is notable that a failure, without reasonable excuse, to comply with any requirement imposed by a UWO has the effect of establishing a rebuttable presumption that the subject property is recoverable property for the purposes of civil forfeiture proceedings. However, to avoid triggering the presumption, it is only necessary for the respondent to ‘purport’ to comply with the order.
If, in compliance or purported compliance with a UWO, a person knowingly or recklessly makes a statement that is false or misleading in a material particular, they are guilty of an offence. The offence is punishable on conviction on indictment with a maximum sentence of two years imprisonment (section 362E of the Act).
A statement made by a person in response to a requirement imposed by a UWO may not be used in evidence against that person in criminal proceedings. This prohibition does not apply to proceedings ancillary to offences contrary to section 362E (section 362F). The prohibition does not apply in a prosecution where, in giving evidence, the person makes a statement inconsistent with the statement and evidence relating to it is adduced, or a question relating to it is asked, by the person or on the person’s behalf in proceedings arising out of the prosecution (section 362F(3)).
