What Are the Most Common Tactics Used for Concealing Assets?

Our specialist divorce solicitors routinely work with courts, digital forensics specialists and forensic accountants to uncover concealed assets and hidden wealth. Common tactics include:

Transferring assets to a third party

This involves transferring money or property titles to family members or friends to hold until the divorce process is complete. However, under the Matrimonial Causes Act 1973, the court can reverse any transaction intended to defeat a financial claim.

Undisclosed bank accounts and offshore holdings

Using a secret bank account, often in a sole name or held in offshore accounts, is a well-established method of obscuring funds. Bonuses, inheritance or other capital can be diverted into these undisclosed accounts to keep them out of the immediate financial picture.

Underreporting income or business value

For self-employed individuals or those with significant business interests, there can be a temptation to misrepresent earnings. This may involve undervaluing assets, inflating business expenses with fake invoices, or deliberately providing a low valuation for shares in a private company.

Creating 'phantom' debts

An individual might create fake loan agreements with associates to make it appear they have significant liabilities, thereby reducing their net worth on paper. These are often quickly identified during the financial disclosure process.

Using cryptocurrency and digital assets

The perceived anonymity of digital wallets makes cryptocurrency an increasingly common tool for financial deception. However, bank transfers to crypto exchanges are easily traceable on bank statements, providing a starting point for a digital forensics expert.

Deferring compensation

Some individuals may ask their employer to delay a bonus, pay rise or the vesting of stock options until after the financial settlement is finalised. This is still considered a deliberate attempt at non-disclosure.

What Are the Methods Used for Uncovering Hidden Assets in a Divorce?

The UK legal system provides a robust set of tools for uncovering concealed assets. The process starts with Form E, a detailed document that is central to financial disclosure. Both parties must complete this form, which requires a full listing of all assets, from property and pensions to offshore holdings and digital assets. This must be signed with a statement of truth.

If  discrepancies or omissions are identified within your ex-partner's Form E, a number of mechanisms are available to investigate these:

• Issuing a questionnaire: A family law solicitor can demand specific evidence and documentation, such as 12 months of bank statements, credit card bills and business accounts to clarify any inconsistencies.
• Instructing a forensic accountant: These specialists are invaluable in complex or high-value cases. A forensic accountant can conduct a lifestyle analysis to see if a person’s reported income matches their spending habits. If it does not, the court will assume there are other income sources. They can trace transactions and uncover even the most complex attempts at financial concealment.
• Engaging a digital forensics specialist: Qualified experts can use the latest forensic methods to interrogate mobile phones, laptops and other digital media including social media accounts. They can then retrieve digital interactions, analyse the evidence and investigate the concealment of assets.
• Applying for a court order: If a spouse refuses to cooperate, solicitors can apply for a court order to compel them. This can include third-party disclosure orders, which force financial institutions like banks or employers to provide the relevant financial information directly to us, bypassing the ex-partner completely.
• Applying freezing orders: In extreme cases of asset concealment, where there is clear evidence that assets are at risk of being moved or destroyed, the court can grant a freezing order. This order freezes your ex-partner’s assets and prevents them from being disposed of or removed during the divorce proceedings.

What Is the Penalty for Hiding Assets in Divorce? (UK)

If you are found to have deliberately concealed assets during divorce proceedings, the court will take a very dim view of your conduct. Hiding assets in divorce in the UK can result in criminal as well as financial penalties, and a range of other serious consequences.

Adverse inferences

A judge can draw an adverse inference, which means they can assume the value of the concealed assets is much higher than suspected. They may then award the innocent spouse a larger share of the known marital assets to compensate for what has been hidden. This can result in a very unfavourable divorce settlement.

Financial penalties and cost orders

You will likely be ordered to pay your spouse's legal costs. These legal fees, including the cost of hiring a forensic accountant to conduct their own investigation, can be substantial. This is one of the most direct financial consequences.

Setting aside a final financial order

A divorce settlement is not necessarily final. If undisclosed assets are discovered months or even years after a financial order was made, the court has the power to set aside the original agreement and reopen the entire case, meaning the financial settlement will be re-negotiated based on the true figures.

Criminal charges: contempt of court and perjury

Lying on your form E by failing to provide full financial disclosure is a criminal offence. Making a false statement you know to be untrue is perjury. Deliberate non-disclosure can also lead to charges of contempt of court. The penalty can therefore include heavy fines, a criminal record, and, in the most serious cases, imprisonment.