Unexplained Wealth Orders
In April 2017 the Criminal Finances Act (CFA) 2017 received Royal Assent. Its intention is to fight corruption in the UK.
Part 1 contains a provision for Unexplained Wealth Orders (UWO); and has created new section in the Proceeds of Crime Act (POCA) 2002 after Section 362.
This gives specific enforcement agencies[1] power to request an individual to explain the origin of an asset if the agency believes it to be beyond the means of his income.
The CFA describes a UWO as
Section 362A(3) ‘…an order requiring the respondent to provide a statement—
(a) setting out the nature and extent of the respondent’s interest in the property in respect of which the order is made,
(b) explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met),
(c) where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order, and
(d )setting out such other information in connection with the property as may be so specified.’
In granting an order the High Court must, in the first instance, be satisfied in its belief that the respondent holds the property and that the property value is over £50,000. It must also be satisfied that the sources of lawful income of the respondent could not support the acquisition of the property.
Section 362B(4) states that the High Court must be satisfied that:
‘…(a)the respondent is a politically exposed person[2], or
(b)there are reasonable grounds for suspecting that—
(i)the respondent is, or has been, involved in serious crime (whether in a part of the United Kingdom or elsewhere), or
(ii)a person connected with the respondent is, or has been, so involved…’
The application may be made without notice.
The order will compel the respondent to provide a statement, within a specific response period[3], in response to the UWO setting out how he became to be in possession of the property. However, if the respondent ‘purports’ to comply then this is not seen as a failure to comply[4].
The applicant agency may apply for an Interim Freezing Order (IFO). Where an IFO is in place and where a respondent has complied with the order, the Applicant agency has 60 days to determine what action it intends to make in relation to the response[5]. If the applicant agency intends to take no further action it must inform the High Court of this decision as soon as practicable and before the 60 days end[6].
Where no IFO is in place the Applicant agency has no time limit in which to decide to take action, if any[7]. A cautionary note, where the agency has decided to take no further action, the Act does not prevent action being taken subsequently if new information comes to light.[8] The agency can retain the information to be used at a later date.
Failure to comply with the order will result in the assertion that the property is criminal property and is recoverable by the agency using measures under POCA for civil recovery.
Section 362E creates an offence of ‘knowingly or recklessly’ providing false or misleading information when responding to a UWO. The either way offence carries 12 months imprisonment and/ a fine on summary conviction or 2 years imprisonment and/ a fine on indictment.
© Daniel Cundy & Naureen Shariff, 31 October 2017
Footnotes
[1] S.362A(7) – Enforcement agencies are: HMRC, NCA,, FCA, SFO and DPP
[2] S.362B(7) – defines a Politically Exposed Person (PEP)
[3] S.362C(4) – defines the response period
[4] S.362C(5)(a)
[5] S.362D(3)
[6] S.362D(4)
[7] S.362D(5)
[8] S.362D(6)
