Those suspected of money laundering could be required to explain the origins of any unexpected wealth - or risk forfeiting it - under measures being considered by the UK government.
The idea of linking UWO’s with civil forfeiture powers for anything thought to be a “money laundering concern’’ is the main part of the proposals that the government has put out for consultation. The proposals also include a new offence of “'illicit enrichment’’ for use against public officials who have experienced a "significant and inexplicable" increase in their assets.
Home Secretary Theresa May has called the proposed reforms the most significant changes to the UK's regulatory regime in more than a decade. In talking about the proposals, she emphasised their value in helping combat the consequences of money laundering; notably political instability, financing of terrorism and the threat to legitimate commercial interests.
It may be hard to argue against the claims from the Home Secretary about the problem posed by money laundering. But her assertion that the proposals send a clear message that such activity will not be tolerated in UK financial institutions has to be questioned. Her belief that these developments could forge a new partnership with industry, improve suspicious activity reporting and boost information sharing for enforcement purposes should also raise a few eyebrows.
UWO's are already used in some countries. There can be little doubt that they could lead to people losing assets that they have acquired illegally if they were introduced in the UK. They may also be a way of gaining intelligence on criminal activity from the financial sector.
But in the UK, there are other legal approaches already in place to make sure anyone suspected of money laundering or benefitting from the proceeds of crime are made to account for their activities and wealth. There is also no shortage of procedures for those working in finance to report any suspicions about the origins of assets they are being asked to handle.
For this reason, it seems unclear why any more legislation is required.
As we write, Rahman Ravelli is involved in a number of high-profile civil recovery cases. Such cases are testament to the fact that the government and its agencies already have adequate measures in place to pursue those it suspects of moving around wealth that has been acquired illegally.
Proceeds of Crime Act
Our starting point for civil recovery is the Proceeds of Crime Act 2002 (POCA). This Act created the Assets Recovery Agency (ARA), which was devised to take the profit out of crime; mainly by taking back the assets people were alleged to have gained through criminal conduct.
The issue with civil recovery is not one of prosecution and the establishing of guilt: there is no jury and the cases can be determined on the civil law standard of proof (on the balance of probabilities) which is lower than the criminal standard of beyond reasonable doubt. Civil recovery under POCA is about showing that the assets in question were the proceeds of crime and giving the authorities the means of taking them from their owners.
The ARA was replaced by the Serious and Organised Crime Agency (SOCA) in 2008 which, in turn, was disbanded and succeeded by the National Crime Agency (NCA) in 2013. The NCA, not to mention other agencies such as the Serious Fraud Office (SFO), HM Revenue and Customs and Crown Prosecution Service, all have the ability to bring civil recovery proceedings to try and obtain money and property they believe to be the proceeds of crime.
All they have to do, under Part 5 of POCA, is prove that the assets concerned are, or represent, property obtained through illegal conduct. With such a clear facility at its disposal, it remains unexplained why the government feels there is any need for UWO’s.
Having such procedures in place does make the government’s call for UWO’s appear unnecessary. It may be harsh to brand the call a case of political smoke and mirrors created as a response to the recent Panama Papers scandal over tax evasion. But that does look like what it is.
We say this having huge experience of defending perfectly innocent people against the authorities’ allegations and attempts to seize their wealth. As mentioned earlier, guilt is not an issue in civil recovery and only the civil standard of proof is required for the authorities to be able to take a person’s assets off them.
In a case that we have taken to the European Court of Human Rights, we are representing two people who have been cleared in court of criminal allegations. Despite them being found not guilty of any crime, the UK authorities are relying on the same allegations to try and take their assets off them via the English High Court route of civil recovery.
The case is the first civil recovery case to go to the European Court. But it can also be seen as the strongest possible argument for saying that the UK government lacks no powers when it comes to civil recovery: making the call for UWO’s inexplicable.
When such activity is considered, it does beg the question why UWO’s would ever be needed.