Unexplained Wealth Orders: A powerful tool against financial crime
Unexplained Wealth Orders (UWO) were introduced by the Criminal Finances Act 2017, which came into force on 31 January 2018.
A UWO provides the ability to confiscate proceeds of crime via a civil, as opposed to a criminal, route.
In order for a UWO to be granted, the court must be satisfied that there are reasonable grounds to suspect the respondent (the individual or responsible officer of the respondent if they are not an individual) holds the property which has a value in excess of £50,000 and that there are reasonable grounds to suspect the respondent’s lawful income is insufficient to enable them to obtain the property, or that there are reasonable grounds for suspecting the means to obtain the property were unlawful.
In addition, the respondent must be either a politically exposed person (“PEP”) or there must be reasonable grounds for assuming the respondent is or has been involved in serious crime or they are connected to someone involved in serious crime, either in the UK or elsewhere.
The first UWO was granted in 2018 against Zamira Hajiyeva, whose husband Jahangir Hajiyev was chairman of the International Bank of Azerbaijan from 2011 to 2015. He is currently serving a 16-year sentence for charges which relate to fraud and embezzlement, however as a result of the UWO a civil recovery order was applied for by the National Crime Agency (NCA) in June 2023 which was granted by the court last week.
The civil recovery order related to a house in Knightsbridge, with an estimated value of £14 million and Mile Ride Golf Club in Ascot. The NCA said it believed the assets were obtained as a “direct result of large-scale fraud and embezzlement, false accounting and money laundering” and that it found “no reasonable explanation” for the source of funds used to buy them both.
The NCA’s case was that "The purchase of the golf club was conducted through a complex structure of Luxembourg and Guernsey-registered companies, and by using offshore trusts in Guernsey and later, Cyprus,".
The NCA applied for a property freezing order over both properties in March 2021 and a claim for civil recovery was made to the High Court in June 2023.
On 1 August 2024, the High Court granted the order and adjudged the properties were purchased with funds obtained by unlawful means, resulting in the forfeiture of 70% of the value of both properties. However, the court made no finding as to whether Ms Hajiyeva was complicit in those means or indeed whether she was aware of the origination of the funds she used.
Colette Kelly, Partner in Regulatory and Criminal Group commented:
“The process which culminated in the forfeiture of both properties has not been expedient and is the result of a significant amount of investigation and hard work tracing the funds to establish their origin and link them back to the individuals involved, or connected with, the respondent.
“The outcome of this case demonstrates the power an UWO can wield and further shows that the relevant crime agencies are determined to expose and uncover fraud in its many guises.
“The forfeiture will be seen as a significant success for the NCA. Given the cost protection measures that The Economic Crime (Transparency and Enforcement) Act 2022 subsequently provided to alleviate the financial risks associated with UWO applications, it is also possible that we will see further use of UWOs by other government agencies including HMRC and the Serious Fraud Office.”
