According to Donald Toon, the National Crime Agency’s (NCA) director of economic and cyber crime, unexplained wealth orders (UWOs) are the much-needed weapon for waging war on the flow of dirty money into the UK. With Toon’s organisation having just begun its second case involving UWOs, Aziz Rahman wonders just how many more will follow.
Only recently, Donald Toon has stated: “Unexplained wealth orders have the potential to significantly reduce the appeal of the UK as a destination for illicit income. They enable the UK to more effectively target the problem of money laundering through prime real estate in London and across the UK, and we will now seek to move further cases to the High Court.”
There have been headlines about three UWOs being obtained by the NCA as part of its investigation into London property allegedly connected to a politically exposed person (PEP) believed to have links to serious crime. These UWOs relate to three residential properties with a total value of more than £80 million.
This episode is the second time that the NCA has obtained UWOs as part of an investigation since they became an element of UK law in January last year thanks to the Criminal Finances Act.
Coincidentally, the target of the first investigation involving UWOs was the subject of headlines just hours before the NCA let it be known that it had secured its second UWOs, The first UWO was issued last year against two London properties believed to be owned by Jahangir Hajiyev, the jailed former chairman of the International Bank of Azerbaijan, and his wife Zamira Hajiyeva. It was the latter’s eye-popping spending at Harrods that was being disclosed to the media in the days before the NCA said that its second case involving UWOs was underway.
No-one can say there has not been plenty of media coverage of UWOs. The headlines have been made by both the two cases so far and the reports that heralded the arrival of UWOs and their possible use in combating the proceeds of crime. Yet two cases in 18 months can hardly be claimed to be the effective targeting of money laundering that Donald Toon hoped for. For an agency that is semingly so pro-UWOs, the NCA isn’t rushing to the courts to seek them on a regular basis.
This is despite Toon’s statement last year that the NCA was examining between 120 and 140 individuals to see if they were suitable targets for UWOs. So either all of those individuals were not, as it turned out, the right ‘fit’ for a UWO or the NCA is more reluctant to use UWOs than it has made clear in its public pronouncements to date.
Grand total of zero
What also has to be remembered is that it isn’t just the NCA that has been less than gung-ho in its use of UWOs. UWOs can be applied for by agencies other than the NCA. The Serious Fraud Office, Her Majesty’s Revenue and Customs, the Financial Conduct Authority and the Crown Prosecution Service can all seek a UWO if they believe it would assist in tackling money laundering.
How many UWOs have these agencies sought in the past 18 months? The grand total is zero.
It may well prove to be the case that, for some reason, the floodgates open and we see the NCA and the other agencies mentioned rushing to secure UWOs for large numbers of investigations. If that proves to be the case, we will then at least see if Donald Toon’s claims for UWOs are based in fact or mere optimism.
Stating that UWOs have the potential to deter those looking to launder money in the UK is a big statement. For now, at least, that potential hasn’t been fulfilled. That doesn’t necessarily mean UWOs are more of a white elephant than a valued weapon, although it will be hard not to reach that conclusion unless we see them being used more regularly and effectively.
I’m certainly in no rush to write off UWOs, but there have always been some of us who’ve viewed them as a gimmick. An attempt by the Government to come up with a plan to tackle money laundering or, perhaps more accurately, be seen to be doing something about it. That’s not an opinion based on pure cynicism. It’s based on the inescapable fact that UWOs do not in themselves lead to assets that are bought with the proceeds of crime being seized.
Under UWOs, individuals have to account for how they were able to legitimately obtain an asset. This enables the authorities to place the burden of proof on the shoulders of the individual being targeted by the order. That alone doesn’t lead to assets being seized, though. Any agency that obtains a UWO against an individual is more than likely to face a legal challenge to it from that same individuals – and any challenge is likely to prevent even the most determined agency from achieving a quick seizure of the assets. Even if that challenge ultimately proves successful, the agency will still have to go down the traditional civil recovery route in order to obtain the assets.
Civil recovery proceedings
The irony here is that civil recovery proceedings can be brought forward without a UWO. Without being able to guess the mindset of senior figures at the agencies that can obtain UWOs, this fact surely cannot have escaped them – which may account for the pitifully small number of UWOs we’ve seen so far.
It’s worth making the point here that UWOs can be issued against PEPs – classed as someone with a prominent public function in a state outside the European Economic Area (EEA) – or those involved in serious crime in the UK or elsewhere. The UWOs issued so far have been against PEPs, which may be a sign that the agencies see no need to use them against anyone who’s not a political figure from beyond the EEA.
That could account for the low number of UWOs so far. if it does, then it makes it very unlikely that UWOs will ever be the success story so many believed they could be.
Aziz Rahman is Senior Partner and Head of the Corporate Crime Group at Rahman Ravelli Solicitors