In recent years there has been an increase in the number of headlines and news stories touting the UK as a safe haven for money launderers. Nowhere is this more prevalent than within the London property market.
However, as of 31 January 2018, certain UK authorities have the power to apply for an unexplained wealth order (UWO). We explain the new rules.
UWOs, introduced under the Criminal Finances Act 2017, are an order of the High Court requiring a person to explain their interest in a property. Certain authorities can apply for a UWO against individuals.
A person can be the subject of a UWO if:
- That person is reasonably suspected of being involved in or connected with a serious crime, or
- That person is a politically exposed person from outside the EEA
A person will have to explain their interest in the subject property where its value is greater than £50,000 and there are ‘reasonable grounds’ to suspect that the respondent’s known lawful income would be insufficient to acquire the property.
Provided the above criteria are fulfilled, certain enforcement authorities – the National Crime Agency, HMRC, the Financial Conduct Authority, the Serious Fraud Office and the Crown Prosecution Service – have the power to make an application to the High Court.
Points to note include:
- The burden of proof is reversed. If a person subject to a UWO fails to respond to a request for an explanation, there is a presumption that the subject property has been purchased with illegitimate funds and will be recoverable in civil recovery proceedings.
- The standard of proof is that there must be ‘reasonable grounds’ for suspicion. This is lower than the criminal standard of beyond all reasonable doubt.
- It is a criminal offence to knowingly make a false statement in response to a UWO.
- Where an authority does not have the power to apply for a UWO, it may refer the matter to one of the other enforcement authorities
The introduction of the UWO is just another tool in the long running desire by the authorities to deal with the fruits of bribery and corruption. Time will tell if it is an effective weapon or simply window dressing.