‘Dirty Cash’: Unexplained Wealth Orders Explained

What is an UWO?

An UWO is an order that requires the respondent to provide information on their ownership of specified property (including details as to any applicable trust settlement) and the means by which such property was obtained (including how any costs incurred in obtaining the property were met).

How and by Whom can an UWO be Obtained?

An application to the High Court for an UWO may be made by certain UK enforcement agencies such as the Financial Conduct Authority, Her Majesty’s Revenue and Customs, and the Serious Fraud Office.

An UWO application reverses the burden of proof from the enforcement agency to the respondent therefore it is the respondent who has to show that the subject property was lawfully obtained and owned by them.

Does an UWO Recover Assets?

An UWO is an investigative tool and does not in and of itself confer the power to recover assets.  That said an UWO will undoubtedly be a crucial preliminary step in recovery actions under the Proceeds of Crime Act 2002 going forward.  For example, should a respondent to an UWO fail to provide the ordered response, this may give rise to a presumption that the subject property is recoverable under any subsequent recovery action.

When might an UWO be made?

The court may make an UWO in respect of any property if satisfied of the following matters:

1. There is reasonable cause to believe that the respondent holds the property, and the value of the property is greater than £50,000.
2. There are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income (i.e. lawfully obtained under the laws of the country from where the income arises) would have been insufficient to enable the respondent to obtain the property.
3. The respondent is a politically exposed person from outside the European Economic Area or there are reasonable grounds for suspecting that the respondent is, or has been, involved in serious crime (whether in the UK or elsewhere), or a person connected with the respondent is, or has been, so involved.

What Constitutes Involvement in Serious Crime?

Firstly, there is no requirement on the enforcement agency to prove that the respondent has actually committed a serious crime, i.e. a conviction is not a pre-requisite to an UWO being made.

Secondly, the concept of “serious crime” in the UWO context appears to be very broad, as whilst it embraces the most obvious crimes of trafficking of drugs, people, or arms it also extends to false accounting, fraud by false representation, the common law offence of bribery, infringement of certain intellectual property rights, and the associated inchoate offences.Furthermore, the court may in the particular circumstances of a case deem an offence to be sufficiently serious to be treated for the purposes of an UWO application as serious crime.

What Constitutes Reasonable Grounds?

There is currently no guidance as to what constitutes “reasonable grounds” for suspecting a respondent is, or has been, involved in serious crime.

Are UWOs a Proportionate Response?

As most proceeds of crime cases involve complex global laundering the reversed burden of proof should enable the enforcement agencies to overcome many of the obstacles they face in tracing the route of suspected proceeds of crime.  However, this power must be closely policed to ensure that those agencies do not use UWOs as a fishing expedition and/or to interfere with an individual’s private property rights otherwise the UK Government could be susceptible to the selfsame criticisms it makes of some other governments.

It appears that the enforcement agencies are alive to this risk as, for example, whilst the Serious Fraud Office has said they are “combing through all existing case work and intelligence and have matters of interest that might transmogrify”* it will wait for an appropriate case before it seeks an UWO.

*(David Green, the head of the Serious Fraud Office, told an audience at London think-tank The Royal United Services Institute on 30 January 2018.)