Unexplained wealth orders - where are we now?

Obtaining an UWO

To obtain an unexplained wealth order (UWO), the court must be satisfied that there are reasonable grounds to suspect that the known sources of the individual’s income would not be enough to enable them to acquire the property that they hold (the value of which exceeds £50,000) and that the individual is either a politically exposed person (PEP) or there is a reasonable suspicion that they are involved in serious crime.

Persons who fail to account for their wealth under one of these orders are liable to have assets seized.

UWOs are interesting as a concept as the burden for proving the source of the wealth falls to the individual holding the wealth as opposed to authorities who have suspicions about it.

The Harrods case

Once notable case is that of Hajiyeva v National Crime Agency [2020] EWCA Civ 108 where the respondent, Mrs Hajiyeva, was the recipient of the first UWO to be made.

Mrs Hajiyeva was married to Jahangir Hajiyev, the former chairman of the International Bank of Azerbaijan. Mr Hajiyev had been accused of embezzling public funds amounting to around €125 million. Mr Hajiyev was convicted and sentenced in Azerbaijan to 15 years in prison and it is thought that his criminal activity led to more than $9 billion of the financial turnover of Azerbaijan being laundered.

Mrs Hajiyeva, through this case, became famous for her spending in Harrods which came to around £16 million between 2006 and 2016. She also owned a five-bedroom house in Knightsbridge, a golf club in Ascot and a private jet.

Given her husband’s conviction, unsurprisingly the authorities wanted to ascertain where Mrs Hajiyeva’s wealth came from and an UWO was issued in 2018.

Mrs Hajiyeva appealed the court order on the basis that it had been granted by the judge on the back of her husband’s conviction which she said had been obtained unfairly. She also argued that the definition of a PEP under the Proceeds of Crime Act 2002 required the person to be entrusted with a prominent public function imposed by the state.

The court of appeal rejected both of Mrs Hajiyeva arguments. In relation to the first it found that the NCA did not rely solely on the conviction of her husband to obtain an UWO against her and had also relied on factors that his income from employment and business ventures would not have enabled him to buy the property he had.

In relation to Mrs Hajiyeva’s argument about the definition of a PEP the court rejected the notion that a prominent public function needed to have been granted by the state. Further, the court found that as the bank to which Mr Hajiyev held a prominent position was a state-owned enterprise, he fell within the definition of a PEP and therefore as his wife, Mrs Hajiyeva was also a PEP.

Interestingly Mrs Hajiyeva also argued that the UWO offended the rules of self-incrimination as well as spousal privilege. Statements made under an UWO cannot be used in evidence against the giver of the statement in a criminal prosecution. This protection is however limited to prosecutions in the UK and Mrs Hajiyeva argued that the statement she would give could be used against her in Azerbaijan.

The court found that the prospect of Mrs Hajiyeva being prosecuted in the UK or Azerbaijan was low and further that the statutory scheme giving rise to UWOs has impliedly revoked spousal privilege.

As at early 2020, Mrs Hajiyeva’s UWO was therefore still in place and she is required to answer it.

Northern property holder

In the case of Mansoor Mahmood Hussain (aka ‘Manni’), a Leeds businessman who in August 2020 handed over 45 properties and assets with a combined value of around £9.8 million, an UWO was successfully implemented through to its end. Mr Hussain is alleged to have associated with gangsters, a murderer and drug traffickers.

Though never convicted of a crime, enough suspicion was raised as to how Mr Hussain obtained his wealth (and for which he paid no income tax in some years) to enable the court to grant an UWO.

A settlement between Mr Hussain and the NCA was agreed, and he gave up the ‘vast majority’ of his assets, including properties in London, Leeds and Cheshire, £583,950 in cash and four parcels of land.

Although it appears that Mr Hussain avoided prosecution, the settlement with the NCA ultimately saved a small fortune in taxpayers’ money needed to prosecute and does not close the door on future prosecutions (although Mr Hussain’s response to the UWO cannot be used against him as outlined above).

The unsuccessful UWO

Not all UWOs (of which there have been little more than a handful) have been successful. The NCA lost their case in National Crime Agency v Baker [2020] EWHC 822 (Admin) concerning three UWOs made without notice in May 2019 relating to properties worth £80 million.

Mr Baker was a solicitor specialising in trusts and tax planning and was also the president of charitable foundations that were the registered owners of the properties in question.

The UWOs were obtained on the basis that the monies that had been used to purchase the properties were in fact the laundered proceeds of crime stemming from criminal conduct of deceased Kazakhstan national Rakhat Aliyev.

Mr Baker challenged the UWO on three bases:

• that the NCA had made errors of law in its application of the statutory framework requirements for UWOs
• that there was material non-disclosure at the ex parte hearing by the NCA and that the NCA had taken inadequate enquiries
• that additional information that had come to light since the orders were made demonstrated that the UWOs were sought on a basis that was flawed

The High Court discharged the UWOs on the basis of the above and went on to set out that the fact property is held through complex offshore structures or trusts does not necessarily mean that the structures are being used for the purposes of laundering money.

Will UWOs continue?

Although we do not frequently see them, the use of UWOs is a powerful tool for the NCA and is one that is likely to continue in the fight against financial crime