Regulation  

Beware the powers of Unexplained Wealth Orders

  • Describe the importance of Unexplained Wealth Orders
  • Describe how UWOs work
  • Describe the powers that enforcement authorities have with UWOs
CPD
Approx.30min

The primary reason Mrs Hajiyeva's case is in the public domain – and the other is not – is likely to be because she sought to challenge her UWO rather than comply with it.

Her arguments against the UWO were, by necessity, heard in open court and thus ultimately reportable. This will be an important factor for any future UWO recipients to bear in mind when considering how to respond.

Consequences of Non-Compliance

For those thinking that they could simply refuse to respond to a UWO, the consequences could be draconian.

A failure to respond triggers a presumption that the property is recoverable (in other words that it is the proceeds of crime), giving the state an easy ride in any subsequent civil recovery proceedings.

What is more, as we have learned from Mrs Hajiyeva’s case, the UWO can come with a ‘penal notice’ meaning that failing to comply with the order could result in the recipient being fined or committed to prison.

What is a PEP?

Politically Exposed Persons, or PEPs as they are commonly known, are one class of person against whom a UWO can be obtained.

The definition of a PEP under the legislation is broad: any individual “entrusted with prominent public functions by an international organisation or a state” other than the UK or another EEA country, or a family member, close associate or person “otherwise connected” to such a person.

The Hajiyeva case affords additional insight into who, exactly, fits the PEP label.

Mrs Hajiyeva's lawyers attempted to argue that her husband, the former chairman of the International Bank of Azerbaijan, was not a PEP as, unlike a judge, politician or civil servant, he was not entrusted with prominent public functions by the state. He was instead, they argued, just a "fat cat international banker".

The court disagreed and found that at all relevant times the International Bank of Azerbaijan was majority owned and ultimately controlled by the State.

It was therefore reasonable to describe it as a state-owned enterprise, and Mr Hajiyev as a person to whom prominent public functions had been entrusted. Mrs Hajiyeva, as his family member, was therefore also a PEP. 

Criminal Conduct

Mrs Hajiyeva also disputed that the known sources of her lawfully obtained income would have been insufficient to purchase the properties.

A significant factor relied upon by the NCA was her husband’s conviction in Azerbaijan for embezzlement of the bank’s funds, fraud, abuse of office and other charges. 

Evidence was placed before the Court that the criminal proceedings against Mr Hajiyev had been conducted without regard to basic defence rights, and ultimately amounted to a show trial.

His criminal lawyers had not been permitted to cross-examine witnesses, to see any of the written evidence or to place their own evidence before the court. His lawyers had also been threatened with criminal prosecution themselves and one of them was suspended from practice.