Unexplained Wealth Orders: First ‘McMafia’ order to be challenged in the Court of Appeal

20th December 2019 Business Crime

Zamira Hajiyeva, the wife of jailed Azerbaijani banker Jahangir Hajiyeva, is seeking to overturn the UK’s first Unexplained Wealth Order (UWO), dubbed McMafia orders.

In February 2018 the National Crime Agency (NCA) successfully applied for two UWOs on Mrs Hajiyeva £15m Knightsbridge home and a £10.5m Berkshire golf course. Mrs Hajiyeya has now launched a legal challenge in the Court of Appeal (the Appeal) claiming the UWO, which legally requires her to disclose the source of her funds, is intrusive and her husband’s trial in Azerbaijan for fraud and embezzlement was unfair and cannot be relied upon as evidence he has been involved in serious crime. Further, her legal team are considering whether Mr Hajiyeya satisfies the definition of a Politically Exposed Person (PEP) against whom a UWO could be granted.

What is an UWO?

Section 1 of the Criminal Finances Act 2017 (CFA 2017) introduced UWOs by virtue of section 362A of the Proceeds of Crime Act 2002 (POCA 2002). The introduction of the legislation gave police greater powers to crack down on people attempting to launder money through the UK and provides a mechanism to confiscate the proceeds of crime by using civil, rather than criminal powers.

An UWO is an order requiring the respondent to provide a statement:

a.    Setting out the nature and extent of their interest in the property in which the order is made;

b.    Explaining how they obtained the property (including, in particular, how any costs incurred in obtaining it were met);

c.     Where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order; and

d.    Setting out such other information in connection with the property as may be so specified.

Before granting an UWO the High Court must be satisfied that there is reasonable cause to believe that the respondent:

1.    Holds the property;

2.    The value of the property is greater than £50,000;

3.    There are reasonable grounds for suspecting that the known sources of their lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property; and

4.    They are either a PEP or there are reasonable grounds for suspecting that:

a.    They are, or have been, involved in serious crime (whether in a part of the UK or elsewhere); or

b.    A person connected with them is, or has been, so involved.

If the respondent fails, without reasonable excuse, to comply with the requirements imposed by an UWO then the property is presumed to be recoverable property and can be seized (section 362C POCA 2002).

Use of UWOs

UWOs came into force in February 2018 and since this date, the NCA has successfully obtained four UWOs, as well as using interim freezing orders at the same time to prevent properties from being sold, transferred or dissipated while the investigations continue. The NCA have made it clear that they will not hesitate to use these powers to tackle illicit funds in the UK and Andy Lewis, Head of Asset Denial at the NCA, described UWOs as “a powerful tool in being able to investigate illicit finance flowing into the UK and discourage it happening in the first place.” He states, “the NCA will not shy away from complex and detailed investigations against high profile individuals and professional enablers.” They “do not investigate illicit finance based on monetary value alone” and “will act against those who [they] believe are causing the most harm to our communities.”

The NCA are clearly making progress with their ability to confiscate illicit gains without the need for criminal proceedings having this month reached a £190m out of court settlement over the assets of Malik Riaz Hussain, which is part of the largest asset recovery settlement ever recorded by the NCA. Mr Hussain, a Pakistani property tycoon, was subject to an Account Freezing Order (also introduced by CFA 2017) over eight of his UK bank accounts containing £120m and these funds, together with a UK property at 1 Hyde Park, London worth £50m, formed the settlement.

The powers granted to financial investigators by UWOs are undoubtedly draconian and intrusive. They grant financial investigators the ability to demand and obtain comprehensive information about the respondents finances which is information they might not otherwise be able to obtain and intelligence which could be used in their later investigations. Further, they have the ability to confiscate assets and all this without any finding of guilt.

The author of this article, Amy Shaffron, is a Senior Associate at JMW's Business Crime & Regulation team in London. She can be contacted via Amy.Shaffron@jmw.co.uk.

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Amy Shaffron is a Partner located in London in our Business Crime & Regulation department

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