What are Unexplained Wealth Orders
Unexplained Wealth Orders (“UWO”) were introduced by the UK United Kingdom government in January 2018 to make it easier for law enforcement agencies to investigate individuals and businesses suspected of involvement in serious crime, and to recover illicitly funded property. At present, only the National Crime Agency, the Serious Fraud Office, the Financial Conduct Authority, the Crown Prosecution Service and HMRC can apply for an Unexplained Wealth Order.
This is a new area of law which means more guidance is produced almost on a monthly basis as cases are run through the system. In that regard, we urge extreme caution to our clients on a number of key factors.
Put simply, you would only receive a UWO if there has been a tip by someone or a company, or the bank facilitating a transaction to the above agencies. They have a range of powers to act – and often they act quickly to freeze bank accounts and other such assets. Your bank can for example raise a suspicious activity report (“SAR”) if you have recently spent a large sum of money, or if copious amounts of cash have been deposited into your account.
If you receive one of these Orders, it means that your affairs are being investigated by one of these agencies. You will need to respond by the deadline in the Order, to avoid the risk of being fined or imprisoned and to reduce the chances of your property being seized and sold. matters getting out of hand – which could include your assets being permanently taken away from you.
Our expert dispute resolution and litigation solicitors are here to support you 24 hours a day, 365 days a year and have produced this short factsheet to answer some of your immediate questions. We are experts in this area of law and have dealt with the agencies such as the NCA to assist clients during this very difficult time.
Who is at risk of an UWO?
In theory, of course, anyone is at risk of a UWO. If an agency is unsure as to where you made your money, they have the ability to investigate you. People at higher risk, however, are:
- Politically Exposed Person (“PEP”) – if you, a family member or someone very close to you is involved in national politics, exposed to the same or stands to benefit from their involvement in the same, you would be at a higher risk of a UWO. Who is considered a ‘PEP’ for the purposes of a UWO is defined by the legislation – if you receive an UWO and think you might fall within that definition you are advised to contact us immediately;
- High or Ultra High Net Worth Individuals;
- People dealing in cash;
- People with a public profile; and
- People advertising a lavish lifestyle on social media (even if it is private, it is not ‘really’ private);
In a world dominated by social media, we advise clients to use discretion when posting about their wealth or their material success. Not only does it attract criminals, it also raises suspicion by agencies. Anything from articles, to photos and even instantly deleted videos can be used as evidence against you.
Why have I received this Order?
You have received an order because an agency has concerns about where money came from that you used to pay for property that you own or occupy. They want to hear what you have got to say about this before deciding whether to take matters further.
That is why the order asks you a series of questions geared at determining whether the concerns the agency have are justified.
The first thing you should do when receiving such an Order is to immediately instruct your lawyers and ideally accountants at the same time. This will allow the team to compile a comprehensive report to the agency and kill the investigation at the earliest possible time.
The Order is typically obtained in the Magistrates’ Court.
Why has an Order has been made against me?
The Order is obtained in the High Court. To satisfy the High Court that an order was appropriate, the agency will have had to show that:
- you hold property with a value of more than £50,000;
- there are reasonable grounds for suspecting you would have been unable to acquire this property through legally obtained income or capital; and
- you are either (i) a Politically Exposed Person, or (ii) someone reasonably suspected of involvement in serious crime, or of being connected to someone who is involved in such crime.
Your public profile here therefore plays a key role. It is, of course, always good practice to have detailed notes and reports of your earnings to present to the agency if required.
If you have received an UWO it is because an agency has concerns about where money or assets that are either held in your name or for your benefit came from. They want to hear what you have got to say about this before deciding whether to taken matters further. That is why the Order asks you a series of questions aimed at determining whether the concerns the agency have are justified.
The first thing you should do when receiving such an Order is to immediately instruct your lawyers, and ideally accountants at the same time. This will allow the team to compile a comprehensive report to the agency and kill the investigation at the earliest possible time.
Why was I not warned that an order was being considered?
Law enforcement agencies rely on the element of surprise in catching people suspected of involvement in criminal activity, which is why you will not have been forewarned that an Unexplained Wealth Order was on its way.
These orders are applied for in private and granted by the court where specified criteria (set out below) are met. They are typically accompanied by a Freezing Order to prevent you disposing or otherwise dealing with the property until such time as the agency’s investigations have been concluded.
Do I have to answer the questions posed?
Failing to supply the requested information about the property specified in the Order can be a Contempt of Court, which is punishable by a fine and/or imprisonment. It also runs the risk of the property being deemed by the Court to be ‘recoverable’. That means you are at risk of the agency obtaining a further Court Order that the property must be taken from you by the state. answer any questions put to you could result in you being fined or sent to prison. This may also lead to adverse inferences being drawn which could result in your property being needlessly confiscated. Therefore, yes, you do need to answer the questions but only after taking legal advice to ensure that you do so carefully.
Giving false or misleading information or documents about where the property has come from, or why it is in your possession, can also amount to a criminal offence. That offence is punishable with either a fine or imprisonment for up to 2 years. Therefore, yes, you do need to answer the questions but only after taking legal advice to ensure that you do so carefully.
What evidence do I need to produce to show my innocence?
One of the key elements about UWO’s is that the burden of proof is reversed. This means that rather than the agencies proving your guilt, you need to prove you are innocent.
To convince the investigating agency that their suspicions about the origins your property are unfounded, you will need to provide a reasonable and credible explanation as to how the property specified in the Order came into your possession, together with proof of the legality of any of the funds used to pay for the property’s acquisition and upkeep.
You will need to provide bank statements, payslips, contracts, shareholders’ agreements, loan agreements, Deeds of Trust, and any other evidence document that clearly shows that the property sums being sent to in question was legitimately acquired by you, or is legitimately held on your behalf/for your benefit, you are due to you fairly and properly.
Often what is written about you in the public record, as well as what you publish yourself on social media, can be a trigger point. We would therefore urge caution on how you manage your public image.
The evidence therefore needs to be coherent, comprehensive and properly presented.
The team involved in assisting will often be:
- Solicitors and Barristers (depending on the amount, perhaps QCs);
- Banking and accounting experts; and
- Area- specific experts such as property consultants.
How long will I have to wait to find out whether any further action is likely?
In most cases, the agency will have 60 days from receipt of your response to decide whether further action is appropriate or whether, for the time being at least, their investigation into your affairs should be shelved. For this reason, it is essential not to leave anything to chance. It is better to be clear and comprehensive from the beginning rather than have to deal with the same at Court.
Why has an Order has been made against me?
To convince the court that an order was appropriate, the agency will have had to show that:
- you hold property with a value of more than £50,000;
- there are reasonable grounds for suspecting you would have been unable to acquire this property through legally obtained income or capital; and
- you are a politically exposed person or someone reasonably suspected of involvement in serious crime or of being connected to someone who is.
Your public profile here therefore plays a key role. It is of course always good practice to have detailed notes and reports of your earnings to present them when required.
Can I challenge the Order?
Most UWOs are obtained without the intended recipient knowing that the application was being made. Therefore, you are very unlikely to be given the opportunity to object to or oppose that application. Once made, the Order must be complied with unless it can be successfully challenged or appealed. We have appealed UWOs and have been able to present a stronger case in front of the Judge. These are appealed in the Crown Court in front of seasoned Judges.
You can challenge the making of an UWO if the legal requirements are not met (e.g. the property is not worth over £50,000, or there is no reasonable cause to suspect that either (i) the property could not have been acquired from lawful income, or (ii) the owner of the property or someone close to them has been involved in serious crime). You will have had no chance to object to the order being made, you would have thought that there would be an automatic right to bring a challenge. However, no such right exists.
That said, the Court has shown itself willing to consider appeals. In our view this should always be considered, particularly where the evidence against you is flimsy or there is reason to suspect the Court has not been made aware of facts known to the agency which, had they been disclosed, might have resulted in the court declining to make an order.
Similarly, it is possible to appeal the making of an UWO to the Court of Appeal. However, the grounds upon which such an Order can be successfully appealed are limited, and we have also found that clients often underestimate the reach of the agencies’ power to obtain and enforce such Orders. It is far better to take legal advice as soon as you discover that an Order has or is about to be made, than to wait until you are faced with Forfeiture Orders etc because you have not provided sufficient information to show where the property came from.
Often, unfortunately, we are instructed to appeal with the proper documentation at hand, rather than deal with the case when it is far simpler.
It is important to remember, when you challenge an unexplained wealth Order, you are effectively involved in a trial which means investing time with your legal team and experts to obtain and provide them with all the relevant documents in support of your response and giving evidence at Court.
Is it possible to attack a Freezing Order?
A Freezing Order is a Court Order preventing you from accessing or disposing of your property until the agency is satisfied that its source was legitimate. They are often obtained as precursor to an UWO or an Account Forfeiture Order. Mercifully, it is possible to challenge a freezing order and better than that there is a positive obligation on the court to revoke such an order if, following receipt of your response, the agency fails to act quickly enough in applying for a follow up order in respect of the property it has chosen to target.
The court must also revoke a freezing order where the agency decides, after reviewing your response, to drop the case against you or where they try to take matters further but the court refuses to let them do this.
Can I claim compensation if the case is dropped?
Where the court agrees to discharge a Freezing Order it may be possible for you to claim compensation where you can prove that you have suffered loss as a result of the order having been made and:
- there has been serious default on the part of the applying agency; and
- the order would not have been made had the default not occurred.
However, you only have three months from the date of discharge in which to apply, so again it is vitally important that you act quickly.
For immediate legal advice following receipt of an unexplained wealth order Please contact Tom Keya on 0203 786 8965 or email enquiries@berkeleyrowe.com; tomkeya@berkeleyrowe.com