Senior Partner Aziz Rahman explains in an article for UMI what an Unexplained Wealth Order is and how to respond to one

Unexplained wealth orders (UWOs) are arguably the most powerful tool that the authorities have for taking someone’s wealth.

Introduced into UK law by the Criminal Finances Act 2017, a UWO requires a person to explain how they came to possess a particular asset. The person is obliged to explain how they came to legally acquire that asset – and if the authorities are not satisfied with the explanation they can begin proceedings to seize it; using powers under the Proceeds of Crime Act 2002.

At the time of writing, the subject of the first UWO is seeking to overturn it. Zamira Hajiyeva, the wife of a jailed banker, will lose her £15M London home and a Berkshire golf course to the National Crime Agency (NCA) if the Court of Appeal does not agree with her argument that the NCA’s case is based on unsupported claims that her wealth comes from corruption. The woman who made headlines for spending £16M at Harrods has unwittingly become a high-profile test case.

UWOs and Business

Some people reading this may think this has little to do with business. But they should think again because a UWO can be issued against anyone in any line of business if the authorities believe they are benefiting from crime.

Shortly after the introduction of UWOs, the Financial Conduct Authority (FCA) made it known that it had identified up to 140 potential targets for UWOs. They can be obtained by the Serious Fraud Office, the Crown Prosecution Service and HM Revenue and Customs as well as by the FCA and NCA. And they can be used against individuals, companies or trustees.

It would be dangerous, therefore, to believe that UWOs will not be used against those in business. And as UWOs are a civil law matter, assets can be seized without the subject of the UWO ever being found guilty of any offence. When the authorities apply to the court for a UWO, all they have to show is that a crime was committed on the balance of probabilities – the civil law standard of proof - rather than beyond reasonable doubt, which is the criminal standard of proof. Any subject of a UWO, however, has to provide proof that they acquired the assets in question legally – otherwise they are likely to be seized.

Challenging Allegations

That may seem harsh but that is how it is. It means that those in business have to consider what to do to ensure they are not suspected of wrongdoing. And, as with the proving or disproving of any allegation, this comes down to the evidence: if a business can provide clear, easily accessible information that shows everything is “above board’’ the authorities will struggle to build a case for a UWO.

The most straightforward way of doing this is by ensuring that all business activities are recorded and that those records are comprehensive, in-depth and up to date. Properly audited, complete records of all business activity are the best response to any allegations of illegal business conduct as they provide the evidence necessary to counter any assumptions from the authorities.

While this can – and often will – be enough to persuade the authorities that there has been no illegal activity, sometimes more is required. Which is why it is important to know how to respond to the allegations made and be able to assess the scope for challenging and / or negotiating with investigators. This requires both in-depth expertise in this area of law and experience of dealing with the authorities involved.

While UWOs are relatively new, the authorities that can use them have been using the civil law to target those they suspect of business crime for years. They have been able to issue restraint orders to freeze the personal and business assets of individuals since the Proceeds of Crime Act 2002 was introduced.

Civil recovery of assets will always be an attractive option for the authorities as it enables them to punish those they suspect of wrongdoing without ever having to prove wrongdoing. UWOs are the latest option available to the powers that be but, as with restraint orders, they can be challenged by those who know both the ins and outs of this area of law and how to tackle the authorities making the allegations.

Judgement in the case of Zamira Hajiyeva is expected in 2020. While it would be unwise to predict the outcome of the case, it does at least indicate that there is the potential for challenging a UWO.

Aziz’s article originally featured on UMI website.