UK: Police lose no time in issuing first unexplained wealth orders

Monday, 05 March 2018
Two unexplained wealth orders (UWOs) have been issued to investigate UK assets whose ultimate beneficial owner is believed to be a politically exposed person.

 

The assets concerned are two properties in London and south-east England. Their combined value is GBP22 million, according to the National Crime Agency (NCA).

The UWOs are the first to be issued, under provisions of the Criminal Finances Act 2017 that came into force on 31 January. In fact, while the Act was progressing through Parliament, the government said UWOs would not be used during the first year in which they are available. However, the continuing controversy over the extent of foreign ownership of prime UK property, especially in central London, has given rise to suspicions that it is used to launder the proceeds of government or business corruption abroad. Earlier this year, the government confirmed that a beneficial ownership register of foreign companies that own or buy UK property will go live in early 2021. Draft legislation is to be published this summer by the Department for Business, Energy and Industrial Strategy (BIS).

The NCA's Director of Economic Crime, Donald Toon, said that UWOs enable the UK to more effectively target the problem of money laundering through prime real estate in London and elsewhere. 'They have the potential to significantly reduce the appeal of the UK as a destination for illicit income', he said. 'We are determined to use all of the powers available to us to combat the flow of illicit monies into, or through, the UK.'

The UWOs require the properties' legal owners to explain the provenance of the particular funds used to purchase them, if the value is more than GBP50,000 and that sum is disproportionate to their known, lawfully obtained income. Many of the associated issues at the court's discretion, for example how long should be allowed for the person named in the order to provide an explanation. The orders themselves may state the time allowed, but that and other details might well be challenged – quite likely, given that responses may be used as the foundation for further investigatory or enforcement action, says law firm Clifford Chance.

The NCA also obtained interim freezing orders against the two houses.In cases such as these, the authorities must decide within 60 days of the subject complying with an order whether to take further investigatory or enforcement action, said Clifford Chance. Failures to respond adequately or at all may give rise to presumptions that particular property is 'criminal property' for the purposes of subsequent civil recovery proceedings.

The identity of the politically exposed person (PEP – usually an official or senior member of the government of a foreign country) is not known. UWOs can only be made against PEPs of countries outside the European Economic Area, or their family members and known close associates, or where the relevant authority has reasonable grounds to suspect that the person concerned has been involved in serious crime.

Sources

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