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Is the McMafia law working?

20 January 2020: the McMafia law, introduced in 2018, is already being challenged. Is it fit for purpose, or will the government see its weapons blunted in the face of organised crime?

In 2018, British crime drama series McMafia hit TV screens in the UK. Viewers were introduced to Alex Godman – the son of a Russian mafia boss who entered the world of organised crime, unable to resist the huge rewards on offer.

Although the hugely successful BBC show was entirely fictitious, it lent its name to the so-called McMafia law that came into place in the UK in 2018 as part of a crackdown by the UK government on individuals living off the proceeds of crime.

Otherwise known as the Criminal Finance Act, the McMafia law comprises two main weapons: account freezing orders (AFOs) and unexplained wealth orders (UWOs). AFOs were largely an extension of existing measures under cash seizure and detention rules, which extended the concept of freezing assets from cash to bank accounts. UWOs, meanwhile, gave authorities such as the police, HMRC and the Serious Fraud Office the ability to seize assets suspected of being acquired through money laundering or other forms of fraud.

Having been introduced relatively recently, the McMafia law is beginning to show cracks in its implementation. Ed Smyth, Senior Associate in Kingsley Napley’s criminal litigation practice, says: “AFOs are relatively widely used but largely for low-hanging fruit – and that’s a criticism because they’re not necessarily being used as the legislation might have intended.”

While AFOs are common practice, the main issue with UWOs is how infrequently they have been used. “The authorities don’t seem to have had much of an appetite for them,” says Smyth. “Working out why isn’t straightforward.”

One reason could be that those who will be on the receiving end are likely to have the resources to challenge them, which has led to a tendency to pursue account freezing orders instead. “If High Court legislation for UWOs is complicated and expensive, then the contrary is true for AFOs,” says Smyth. “Where UWOs have been used, it has tended to be in cases where the amount of money is much larger,” he adds.

Smyth believes the ongoing case of Zamira Hajiyeva, currently being held at the Court of Appeal, could determine whether UWOs have a future. Hajiyeva is trying to change a UWO obtained by the National Crime Agency against a £15m Knightsbridge home. The UWO was awarded based on the conviction of her husband for fraud and embezzlement in Azerbaijan. According to Press Association reports, Hajiyeva has argued that her husband’s trial in Azerbaijan was “grossly unfair”, and that without the conviction the NCA’s application for the UWO would not stand up.

A ruling is now likely to take place in early 2020, Smyth says. “That will probably determine how assiduously the authorities continue going after them,” he says. “If UWOs become less attractive or aren’t given the green light, then the focus will be even more on AFOs.”