To date, unexplained wealth orders (UWOs) have been a damp squib.
In the two years since their introduction, there have been five cases, and one of theses has ended in disaster. Meanwhile, according to the UK’s National Risk Assessment, the level of money laundering has increased during the same period. Based on this performance, wealthy criminals will not be quaking in their boots in the coming year.
UWOs were introduced as an additional tool to assist enforcement authorities in the fight against international crime, particularly organised crime and those who abuse public office.
The new legislation enabled the key enforcement authority, the National Crime Agency, to apply to the High Court for an order requiring a person to explain their interest in property, and most significantly, how they obtained it.
If a person failed to comply or gave an explanation which did not satisfy the court that the property had been acquired with lawfully obtained assets, the NCA could then apply to the High Court for a civil recovery order and the property would be confiscated.
In fairness to the enforcement authorities, before criticizing their performance too harshly, three things need to be said.
First, as with any new piece of criminal justice legislation, it is difficult for enforcement authorities to hit the ground running. Sufficient resources need to be allocated to the department responsible for implementation, and extensive training needs to be arranged.
Also, time has to be allowed for prior investigations to take place before an application for a UWO can be made. In one of the five cases, the NCA has been waiting for a decision from the Supreme Court to clarify the law. This was handed down on 21 December 2020.
This leads to the second point. The legal requirements which need to be satisfied before a UWO can be obtained are not straight-forward. The NCA must satisfy the High Court that there are reasonable grounds for suspecting that a person’s known sources of lawfully obtained income are not sufficient to enable them to obtain the property in question.
In making this assessment, the law requires the High Court to consider sources of income that are “reasonably ascertainable” from available information. This includes information held in public registers and by public authorities, whether in the UK or abroad. The making of these enquiries abroad will be a costly and time-consuming experience.
Additionally, the law provides that income is to be regarded as “lawfully obtained” if it is acquired lawfully under the laws of the country in which the income arises.
Evidentially, this requirement is more difficult to satisfy than appears at first blush. If the conduct committed abroad was transposed to the UK, in many cases it would not be difficult for the NCA to show that the assets had been unlawfully obtained.