Nicola Sharp of financial crime specialists Rahman Ravelli considers the attention given to unexplained wealth orders – and emphasises that they can be challenged.
There is little doubt that many sectors of the media – and their readers – enjoy a story that involves an unexplained wealth order (UWO).
They do, after all, have many of the ingredients that many look for in a good tale: allegations of wrongdoing on a large scale, someone being made to hand over assets worth more than most people will earn in a lifetime and the sense that justice has been seen to be done.
In the latest UWO, which was widely covered in the media last week, Leeds businessman Mansoor Mahmood Hussain was compelled to hand over property worth just short of £10M, after being accused of acting as a money launderer. He has been ordered to surrender the assets because the National Crime Agency (NCA) believed his wealth was the proceeds of crime, and so considered him a suitable target for a UWO.
Introduced by the Criminal Finances Act 2017, UWOs give law enforcement agencies powers to require persons to explain how they came to possess their assets, and to show that their wealth has come from legitimate sources. A UWO can be sought without any civil or criminal proceedings having begun.
There is no need for the subject of a UWO to have been convicted of an offence or to have had a civil law judgement against them. Agencies can apply to the High Court for a UWO against any property valued at over £50,000, if the person owning it is reasonably suspected of being involved in serious crime (or connected to a person who is) and there are reasonable grounds to suspect that a person’s lawfully-obtained income would be insufficient to allow that person to obtain that property.
Like Zamira Hajiyeva before him, Mansoor Hussain’s inability to provide a credible, innocent explanation for his wealth has cost him – and generated headlines. Hajiyeva may be best known for somehow racking up £16M of expenditure at Harrods.
But this only became known when she was the first person to be the subject of UWOs. The NCA expected her to explain how she had bought a £11.5M Knightsbridge house and a £10.5M golf course in Ascot, bearing in mind her husband is the former head of the state-owned International Bank of Azerbaijan, had a salary of no more than $70,000 and was convicted of fraud and embezzlement. Earlier this year, she lost her appeal against the UWOs, thus enabling the media to re-run her story and giving the NCA the chance to make approving noises about UWOs being a valuable tool in tackling illicit finance.
But before there is a rush to applaud UWOs, it should be said that the NCA’s relationship with them has been a chequered one, to say the least. Since becoming available to the NCA, the agency’s success rate with UWOs has been patchy. This is despite the standard of proof for UWOs being significantly lower than that required in criminal cases.
Last year saw the NCA granted three UWOs for London property valued at £80M. Yet less than a year later, these UWOs were discharged, with a judge criticising the NCA’s “unreliable’’ assumptions and “artificial and flawed’’ reasoning. The Court of Appeal then refused the agency permission to appeal this decision.
While a UWO is a tool that enables law enforcement agencies to seize assets they believe are the proceeds of crime without anyone ever being convicted, it does not yet appear to have become the great weapon against illicit wealth that many would have hoped. Of the four cases begun since UWOs were introduced, two are still being contested. Mansoor Hussain’s case is the first time a UWO has successfully led to the recovery of assets from an individual.
Although, a UWO can be seen as effective in certain situations, it will often be considered the most (and perhaps only) viable option when a prosecution has failed or when the authorities do not believe there is enough evidence for a realistic chance of a conviction.
When being faced with an UWO it should be remembered that whilst agreeing to settle and hand over property is not an admission of guilt, anyone facing a UWO must consider carefully how they respond to the authorities. It is vitally important to take the right advice. Deciding how to proceed when assets worth millions are at stake can be the biggest decision a person ever has to make.
In such circumstances it will often be the case that an intelligent, robustly-argued challenge to a UWO – and, in particular, to the allegations being made by the law enforcement agency seeking the UWO – will bring success. But that success will depend on knowing precisely how to respond – and who to turn to – if and when you become the intended target of a UWO.