Unexplained Wealth Orders (UWOs): The High Court Explains In The First Challenge Of A UWO

Summary

On 3 October 2018, the court handed down its decision in National Crime Agency v. Mrs A [2018] EWHC 2534 (Admin). This is the first challenge to the court's new powers to order a respondent to explain their interests in property. The court upheld a decision it had made on 27 February 2018 to grant the National Crime Agency's ex parte application for a UWO against Mrs Zamira Hajiyeva (Mrs A). Mrs A is the wife of a former Azerbaijani state banker (Mr A) who was convicted of fraud and embezzlement (which he denies) in October 2016 and sentenced to 15 years in jail by a court in Azerbaijan. Mrs A is now required to explain the purchase of a property worth approximately £11.5 million in 2009.

Background to UWOs

UWOs were first introduced in the UK on 31 January 2018 by the Criminal Finances Act 2017, which amended the Proceeds of Crime Act 2002 (POCA). Enforcement authorities (Her Majesty's Revenue and Customs, the Financial Conduct Authority, the National Crime Agency (NCA), the Director of the Serious Fraud Office and the Director of Public Prosecutions) can apply to the court for a UWO.

The court will grant a UWO if it is satisfied that:

there is reasonable cause to believe that the respondent holds the property and it is worth more than £50,000; and there are reasonable grounds for suspecting that the known source of the respondent's lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property; and the respondent is a politically exposed person (PEP) or there are reasonable grounds for suspecting that the respondent, or a person connected to the respondent, is, or has been, involved in a serious crime (whether in the UK or elsewhere). If a UWO is made, the respondent will be required to:

provide a statement setting out the nature and extent of their interests in the property; and explain how they obtained the property (including how any related costs were met); and if required, provide further information in connection with the property. The powers introduced by this new regime are very broad:

the enforcement authority can make an application for a UWO without notice to the respondent (as in the case described below); there is no requirement that the respondent or the relevant property is situated in the UK; the respondent need not be the sole owner of the property; the provisions are retrospective – a UWO can be sought in respect of property obtained before 31 January 2018...