The new Unexplained Wealth Orders (UWOs) regime came into force on Wednesday 31 January 2018.
What are UWOs?
UWOs are orders requiring a person ("the respondent") to provide a statement setting out the nature and extent of their interest in a particular property. The statement must explain how the interest in that property was funded, and the respondent may also be required to provide further information or documents.
If the respondent fails, without reasonable excuse, to comply with the UWO within the time specified in the Order, the property in question is presumed to be recoverable by law enforcement as the proceeds of crime in civil recovery proceedings. The burden is then on the respondent to prove the contrary.
It is a criminal offence for a respondent to knowingly or recklessly provide a materially false or misleading statement in response to a UWO, the sentence for which is up to two years’ imprisonment and/or a fine.
When can a UWO be issued?
A UWO can be applied for and issued without notice to the respondent. The High Court may issue an Order if the following three conditions are met:
- The respondent holds the property in question and its value is greater than £50,000. Importantly, it is the value of the property, and not the respondent's interest, which must exceed £50,000. Where an Order is intended to cover more than one item of property, those items can be aggregated to achieve the threshold amount of £50,000.
- There are reasonable grounds to suspect that the known sources of the respondent's lawfully obtained income would have been insufficient for the purposes of enabling them to obtain the property.
- And either:
- the respondent is a Politically Exposed Person; or
- there are reasonable grounds to suspect that the respondent, or a person connected with them, is or has been involved in serious crime (in the UK or elsewhere).
Importantly, it does not matter:
- where the property is located;
- whether or not the respondent is in the UK;
- that there may be other persons who hold the property; or
- that the property was obtained before this legislation came into force.
Can a statement given in response to a UWO be used for collateral purposes?
The short answer is yes. Although a statement made in response to a UWO may not be used in criminal proceedings against the respondent, this protection will not apply if the person makes a statement in any subsequent prosecution which is inconsistent with the statement given in reply to the UWO. Importantly, the information provided in a statement can be used by law enforcement agencies for investigative and intelligence purposes.
UWOs are designed to provide a new tool to assist law enforcement agencies in the fight against corruption and the global movement of the proceeds of crime.
It remains to be seen to what extent they will be deployed and whether they will in turn result in an increase in applications for civil recovery, a power which has hitherto been used only sporadically.
The fact that an Order can be obtained in the absence of the respondent places a responsibility on applicant organisations to proceed with care, making full disclosure to the court.
If an Order is made the regime requires a careful and considered response, and legal advice is likely to be essential.