Unexplained Wealth Orders

What is an Unexplained Wealth Order?

Introduced in the Criminal Finances Act 2017, an unexplained wealth order (UWO) is a court order issued to compel an individual to reveal the sources of their unexplained wealth where that wealth may have been obtained by criminal activity.

Am I at risk of receiving an Unexplained Wealth Order?

UWOs can be issued against anyone believed to hold an interest in the property – perhaps a family member who had nothing to do with the original purchase. They are also retrospective in nature – they can be issued in respect of property that was obtained many years ago – decades even. And – to underline the point – they are mandatory. The choice is stark – comply or accept that there will be a presumption that the property is the proceeds of crime.

You may want to consider the following hypothetical scenarios:

• A client’s child studies in the UK. The child doesn’t work but drives a Ferrari. Could they provide evidence of the source of funds for that car? How do they fund their lifestyle in the UK?
• A house is purchased and held as part of a family trust structure and the beneficiary is a client’s spouse or child. If their spouse or child were served with an order, could they identify the source of funds used to purchase the property? Would they be able to provide documents? Would they be comfortable about disclosing the entire trust structure?
• A client receives a modest official salary. In actual fact they also have several other legitimate sources of income, which generate significant wealth. To what extent would they want to disclose all their financial affairs if required to do so? If they had to do so by next week, would they be able to?

How are Unexplained Wealth Orders obtained?

UWOs are obtained in secret and without notice. The order will require an individual to respond to a detailed list of questions and to provide whatever documents are requested of them. The timescale for preparing this response is incredibly short.

The High Court may grant a UWO if the following conditions are satisfied:

• The respondent “holds” the property (“holds” broadly means exercising, being able to exercise or being entitled to acquire direct or indirect control over the property);
• The property is worth more than £50,000;
• There are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property; and
• Any one of the following is relevant:
  • The respondent is a politically exposed person (“PEP”) or connected to a PEP; or
  • There are reasonable grounds to suspect that the respondent is, or has been, involved in serious crime (whether in a part of the UK or elsewhere); or
  • A person connected with the respondent is, or has been, involved in serious crime.

Upon receiving a notice, what are my obligations?

A failure to comply with the order will lead to a legal presumption that the property is the ‘proceeds of crime’. The authorities will then seek to confiscate that property. Providing false or misleading information constitutes a criminal offence punishable by imprisonment.

Just a few years ago it would have been utterly unthinkable to have a situation where – with no proof of criminal activity – an individual could be compelled to provide the authorities with detailed information as to their finances. This, however, is now the reality.

The timescales involved in responding to an order are incredibly short and the requests for information and documents will be extensive. For families with complex financial arrangements simply assembling the documents in time can be challenging, if not impossible.

Can I do anything to mitigate receiving an order?

Yes, there is a lot that can be done to prepare in advance.

Families may want to consider a precautionary review of their assets and documentation to assess the level of risk they may face and to consider the potential work that could be done to improve their position.

Similarly, those who are contemplating acquiring assets in the UK may want to consider taking advice in advance with regards to any purchase.

What our unique experience has taught us

We defended the first two UWOs which were obtained on 28 February 2018. This unique position has given us an unparalleled wealth of experience and knowledge about them.

It is clear from our experience that the authorities are adopting a broad interpretation of who can be designated a Politically Exposed Person (PEP). This is a matter of considerable concern, given the lack of any requirement for suspicion of involvement in criminal activity (still less proof) prior to obtaining a UWO against a person designated by the authorities as being a PEP.

The UWO represents one of the most disruptive and intrusive devices available to the authorities in the UK and the impact that receiving an order will have on a family is likely to be dramatic. A UWO poses a direct threat to an individual’s privacy, security, and reputation, which families of wealth will understandably be concerned to protect.

If you are concerned with anything in relation to the above, or for more information about us and our Criminal Litigation, Investigations and Regulatory services, please contact a member of the team who will be able to assist.