Unexplained Wealth Orders
December 12, 2017
The Criminal Finances Act 2017 introduced Unexplained Wealth Orders (UWOs), a new investigative tool which extends the UK’s existing civil recovery scheme (as set out in the UK Proceeds of Crime Act 2002 (POCA). UWOs enable UK authorities to obtain the evidence needed in order to freeze and recover assets acquired using illicit funds.
Who is affected?
UWOs can be made against a Politically Exposed Person (PEP), their connections and associates, or from persons where there are reasonable grounds to suspect that they have been involved in, or are connected to serious crime, such as money laundering, whether in the UK or overseas.
A High Court application for a UWO may be made ‘without notice’ and can be simultaneous with other applications (such as for restraint or freezing orders). Therefore if an individual is made subject to a UWO, they may not know until the order is made. A UWO will force individuals to set out the nature and extent of their interest in property where the calculated interest is greater than £50,000. In cases where that person’s reported income is disproportionate to the value of property in question, a UWO will compel the affected individual to explain how they obtained the property in a “Statement in Response”.
A Statement in Response, required within a ‘response period’ set by the court, will need to include details such as:
- The nature and interest in the property;
- How the property was obtained (i.e. origin of funds);
- Details of the trust settlement (if held in trust); and
- Any additional information as stated in the order.
Recklessly misleading the court through a false Statement in Response carries a risk on indictment of up to 24 months imprisonment, a fine, or both. Failure to provide a Statement in Response without reasonable excuse allows UK authorities, without time constraint, to pursue civil recovery of the property in question.
Transparency is high on the international agenda, which has led to increased international cooperation between authorities, information sharing and co-ordinated strategies to achieve effective law enforcement, especially where there is shared jurisdiction.
The UK continues its efforts to tackle illicit wealth. Further to implementation of the Fourth Anti-Money Laundering Directive (4MLD), which established a legal requirement to register ultimate beneficial ownership of UK companies, on 11 December 2017 the UK announced details of its Anti-Corruption Strategy 2017-2022. Parts of this strategy coincide neatly with the introduction of UWOs and build on the 2016 International Anti-Corruption Summit commitment to introduce a public register detailing beneficial ownership of overseas legal entities which own or buy property in the UK.
PwC offers both proactive and reactive legal support for those individuals who might be affected by UWOs. For further information on this subject, or on legal requirements around Transparency more generally, please contact PwC’s Regulatory & Commercial Disputes Team.