National Crime Agency v (1) Andrew Baker, (2) Villa Magna Foundation (3) Manrick Private Foundation (4) Alderton Investments Limited (5) Tropicana Assets Foundation [2020]
04/05/2020
Unexplained Wealth Orders (UWOs) first hit the press in 2018 following the salacious spending spree of Zamaria Hajiyeva, the first (and successful) target of a UWO. While UWOs are robust tools to crack down on white-collar crime, we counselled in our 2018 article that this power must be used proportionately by enforcement agencies and that this proportionality would be key to the future success of UWOs.
A recent ruling from the High Court dismissing the National Crime Agency’s (NCA) request to pursue UWOs against three properties totalling more than £80 million serves as a helpful reminder of this.
UWOs compel a respondent to explain the origins of their funds if their assets seem disproportionate to their known income and if they are suspected of involvement with criminality. If the respondent fails to offer a satisfactory explanation or provides inadequate evidence, the asset will be deemed “recoverable property” for the purposes of a civil recovery under the Proceeds of Crime Act 2002.
Crucially, enforcement agencies can pursue UWOs before any civil or criminal proceedings have been initiated. In fact, the association to criminality is all that is required and there is no need for the subject of a UWO to have been convicted of an offence, either civil or criminal.
This makes them very powerful tools indeed.
The NCA challenged the family of a Kazakhstani former President to explain the source of funds used to purchase properties in different parts of London. The properties were ultimately owned by the family of Rakhat Aliyev, a Kazakhstan national who died in prison in Austria in February 2015. The NCA suspected that these properties were purchased with the proceeds of crime committed by Rakhat Aliyev.
The UWOs were initially granted at a without notice hearing. Despite the respondents and the ultimate beneficial owners volunteering extensive information about the purchase and transfer of the properties to offshore companies, the NCA continued to pursue the UWOs and insisted compliance with the terms of the order. The respondents subsequently applied for the discharge of the UWOs at a return on notice application.
The denouement came on 8 April 2020 with Mrs Justice Lang’s judgment dismissing the NCA’s application for the UWOs. Mrs Justice Lang determined that the NCA’s evidence was “unreliable” and “rebutted by cogent evidence” provided by the respondents. The NCA had failed to prove that ill begotten assets had been used for the acquisition of the properties. Conversely, the respondents had little to no contact with Mr Aliyev and were sufficiently affluent in their own right to fund the purchases.
The NCA intend to appeal the decision.
The potential challenges to UWOs are manifold, even when they are used proportionately. Without notice hearings are breeding grounds for appeals and a lack of clear guidance on “reasonable suspicion” and “politically exposed person” only compounds the issues.
This means that applications for UWOs must be beyond reproach and predicated on wholly inscrutable investigations. Only then can enforcement agencies hold respondents (and their offshore corporate vehicles) to account.
Turning to the future success of this tool, we can only hope that the eagerness of enforcement agencies to secure such orders will not undermine the potential of this incredibly useful instrument to tackle the inflow of dirty money to the United Kingdom.
Related item: Unexplained Wealth Orders – a solution to dirty money or a way to muddy the waters?
