Unexplained Wealth Orders (UWOs) are a potentially valuable tool in the fight against corruption and other economic crimes.
UWOs were originally introduced by the Criminal Finances Act 2017, amending the Proceeds of Crime Act 2002. It enables certain specified enforcement authorities to apply for a court order in relation to property that is worth more than £50,000 and held by non-UK Politically Exposed Persons (PEPs), their family members or close associates. It also applies when there are reasonable grounds to suspect a property owner is involved in serious crime, such as drug and trafficking offences, money laundering and terrorism.
In England, the specified authorities are the National Crime Agency (NCA), HMRC, the Financial Conduct Authority, the Director of the Serious Fraud Office, and the Director of Public Prosecutions. In Scotland, the Scottish ministers are the specified authority.
However, since the powers came into force on 31 January 2018, only the NCA has used its powers to apply for UWOs, and fewer than 15 applications have been granted by the court.
Changes introduced by the Economic Crime (Transparency and Enforcement) Act 2022 (the Act)
The Act amends the grounds on which the court may grant an application for an UWO. In addition to the income test – that the known sources of the person’s wealth are insufficient to have obtained the property – the court may now also grant an application where it has grounds to suspect that a property has been obtained through unlawful conduct.
The Act also grants the court a power to extend the duration of an interim freezing order, while it determines the application.
The effectiveness of the UWO regime
Two key limiting factors appear to underpin the perceived ineffectiveness of the UWO regime. The first is the potential for crippling costs to be awarded against a law enforcement authority when an application for an UWO was successfully resisted by the PEP or suspected person. The second is the comparative lack of resources to enable the NCA to properly investigate the sources of an individual’s wealth and to obtain the depth of evidence required to support a successful application.
The Act addresses the first limiting factor by preventing a costs order being made against a law enforcement authority in relation to UWO proceedings, unless that authority has acted unreasonably, dishonestly or improperly.
However, it will not address the second limiting factor. ICAEW backs calls for greater resources to be made available to law enforcement authorities, to support the fight against economic crime.
The effect of the legislative changes will be monitored. The Act imposes a new duty on the Secretary of State to publish an annual report, which sets out the number of UWOs applied for by law enforcement and the number of UWOs granted by the court.
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