NCA sees off challenge to its first UWO
The new powers of unexplained wealth orders (UWO) and the supporting “interim freezing orders” commenced on 31 January 2018. Criticism has been made of government authorities' (the NCA, HMRC, the FCA, the SFO and the CPS) seeming reluctance to avail themselves of their newfound investigative tool. However, the NCA did issue one in February 2018 against "Mrs A", the wife of a foreign banker who promptly appealed it. The appeal was heard and dismissed earlier last week.
The UWO was issued in respect of a property bought for £11.5million through a BVI registered company. Mrs A had told the Home Office, in 2015, that she was the beneficial owner of the company registered in the BVI. Regulators in the BVI told the NCA that the beneficial owner was in fact Mr A who had been, for 14 years, the Chairman of a state-owned bank in a non-EEA country. Upon his resignation he was accused of "misappropriation, abuse of office, large-scale fraud and embezzlement" according to the judgment. He was convicted of the charges at trial and jailed.
UWOs require that their subject be a person reasonably suspected of involvement in, or of being connected to a person involved in, serious crime to explain the nature and extent of their interest in particular property, and to explain how the property was obtained, where there are reasonable grounds to suspect that the respondent’s known lawfully obtained income would be insufficient to allow the respondent to obtain the property. A UWO made in relation to a non-EEA PEP does not require suspicion of serious criminality.
It is expected, after the dismissal of the appeal, that enforcement authorities will begin to make increased use of their power to issue UWOs and that we will see a greater number being issued towards the end of 2018 than seen in its first half.
With this victory behind them, it is imperative that the enforcement agencies do not overplay their hand. The UWO is a powerful tool which must not be misused for fishing expeditions by investigators. It is important that the courts continue to scrutinise all applications for UWOs with care, balancing the need for information, with the impact on those compelled to provide it.