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The 'Unexplained Wealth Order' explained2nd August 2018 Business Crime
Last week marks the first case heard in the High Court, following the issuing of an Unexplained Wealth Order. The case follows a demand made by the National Crime Agency to an individual (who has not been named) to reveal the source of her wealth. The spending spree of a reported £16 million in London's Harrods store, the accumulation of property in London and an 'extravagant lifestyle' has led to the individual appearing before the High Court to account for her wealth.
What is an Unexplained Wealth Order?
Unexplained Wealth Orders came into force in January 2018 and are said to assist authorities identify and seize property suspected to have been bought by laundered criminal funds, most commonly from foreign sources. In the case of the female who appears before the High Court today, it is reported that her husband was convicted of fraud overseas.
The Orders are justified on the basis that it is difficult for agencies to prove how individuals obtain their wealth when they are based overseas and to arrest and charge the individuals with a criminal offence would be evidentially onerous.
An Unexplained Wealth Order can be issued by the High Court where an individual is 'reasonably suspected' of involvement or connected to a person involved in serious crime to explain how a property was obtained. This will be the case where there are reasonable grounds to suspect that the individual's lawfully obtained income would be insufficient to fund the property. In other words, that their assets are inconsistent with their income.
Alternative circumstances that may give rise to an Order is where an individual living outside of an European Economic Area, or someone associated to them, appears to have unexplained wealth (as is the High Court's case heard today).
As well as the National Crime Agency, an Order can also be applied for by the Crown Prosecution Service, HMRC, Financial Conduct Authority or Serious Fraud Office.
A shift in the burden of proof
An Unexplained Wealth Order undoubtedly places the burden on the individual to prove how they have accumulated their wealth and to raise evidence to verify the sources of the wealth. Once evidence is produced regarding the source of the wealth, a decision will be made by the High Court as to how the case is to proceed.
If an explanation is not forthcoming, it is open to the court to seize property belonging to the individual. Counsel representing the female today in the High Court will reportedly seek to argue that the order is unjustified and that her husband worked as a businessman.
If a response to an Order is not provided, an individual may be subject to their property being recovered under the Proceeds of Crime Act 2002. The court may also consider imposing a Freezing Order or Restraint Order to prevent individuals dealing with the assets in the interim.
The shift in the burden of proof from the investigating authority to the owner of the asset is draconian in nature and concerning, particularly considering that assets will be seized under the Proceeds of Crime Act without a criminal conviction (or even a criminal trial) having taken place. It has been argued that such an approach is necessary to shift the UK's reputation for being a 'safe haven' for criminal funds to be invested.
Future of the orders
It is likely that today's ruling, if in favour of the National Crime Agency, will pave the way for more Unexplained Wealth Orders to be issued. It is clear that the use of the Orders will need to be carefully managed and sufficient evidence raised by the prosecuting authorities who issue them, for fear of the Orders being overly criticised as breaching rights and branded as 'political weapons'.
The clear intention of authorities to investigate and combat 'illicit money' is on the rise. In such circumstances, expert advice must be sought. JMW's criminal defence team can provide the expert advice and guidance you need. Find out more about our expert team and the services and advice we provide by calling business crime partners Evan Wright (0161 828 8315) or Mike Rainford (0161 838 2834) or visit our Business Crime department here.
You can also see a full explanation of Unexplained Wealth Orders in our factsheet here.