The Economic Crime Act, which is likely to become law next week, has been sped through Parliament in response to Russia's invasion of Ukraine with the aim of cracking down on 'dirty money' flowing into the UK from Russia. The new Act will give an attempted boost to UWOs by introducing three new notable provisions:
- Enabling UWOs to be sought against property held in trust and other complex ownership structures such as opaque foundations.
- Increasing time available to law enforcement to review material provided in response to a UWO.
- Limiting costs exposure in the event that a UWO is successfully overturned by the respondent.
The defendants to the UWOs challenged them in the High Court and in April 2020 this challenge was successful. The Court held that the properties were legally owned through two companies, and that "the NCA's assumption" that Rakhat Aliyev was the source of the money used to buy the three properties was ultimately "mistaken" and "unreliable". The High Court concluded that there was "cogent evidence" that Dariga Nazarbayeva and Nurali Aliyev had founded the companies which owned the homes, and had provided the money to pay for them. Ultimately, the High Court ruled that the NCA's evidence did not sufficiently prove that that Rakhat Aliyev's funds had been used to set up various offshore shell companies used to purchase the properties. As a result, the High Court discharged the UWOs and ordered the NCA to pay the defendants' costs, estimated at approximately £1.5 million.
It is no secret that the NCA is underfunded and this serious setback likely dissuaded the NCA and other authorities from embarking on further cases. By reducing the potential costs exposure to an unsuccessful UWO, the Economic Crime Act may kick-start their use after two years of stagnation. Given the comments made about the NCA's evidence by the Court in the Aliyev judgment, this may not necessarily have been a case where the financial exposure would have been limited. However, those subject to UWOs in the future will have put forward strong arguments in court to demonstrate that the relevant investigating authority has not acted reasonably or honestly in order to maximise its costs recovery if they successfully overturn a UWO. Whilst we can expect there to be increased use of UWOs there is still a prospect that well-resourced defendants will be able to overturn them and maximise their costs recovery.
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