Unexplained Wealth Orders

The Rationale Behind UWOs

According to the UK’s first National Risk Assessment of Money Laundering and Terrorist Financing (2015), the National Crime Agency (NCA) believe: ‘…that hundreds of billions of dollars are laundered through UK banks and their subsidiaries each year’. ¹¹

Such laundering is predicated on a variety of crimes, committed both within and outwith the country, and while not all of these proceeds of crime find a home in the UK—never mind its real estate—some of them are invested into UK property. One source of the criminal capital is corruption committed by public officials in foreign countries. According to the NCA, the UK is ‘a favoured destination to launder and invest the proceeds of international corruption’. ¹² Ironically, the NCA suggest corrupt politically exposed persons (PEPs) find the UK an ‘appealing’ place to launder because of its ‘rule of law, judicial processes and adherence to human rights legislation’. ¹³ Elsewhere the NCA posit corruption by foreign public figures not only constitutes a problem to the host states but the transfer and placement of its criminal proceeds into Britain’s property market ‘poses significant reputational and financial risks’ to this country. ¹⁴

When explaining the need for UWOs, the Home Office suggested there were occasions where Britain’s LEAs had suspected assets were the proceeds of corruption but were unable to freeze or recover them under the existing provisions in the Proceeds of Crime Act (POCA) 2002. Often this was because the PEPs under suspicion exerted ‘significant influence in their host jurisdictions’. This meant it could be ‘very difficult, and sometimes impossible, to obtain enough evidence to undertake civil proceedings or convict an individual of a criminal offence’. ¹⁵

The placement of the proceeds of overseas corruption into UK property has created a large set of potential targets for UWOs. In December 2016, the anti-corruption NGO TI-UK identified at least 986 titles to land in London owned by overseas companies connected to politically exposed people. TI-UK suggests the ‘true figure’ was ‘likely to be much higher’ because of significant gaps in the data including the fact it could only find ownership information on slightly more than 50% of the overseas companies owning land in London. Of the PEP-related land titles TI-UK did examine, just over half were owned by companies based in places TI-UK described as ‘secrecy jurisdictions’, such as Panama, the British Virgin Islands and Jersey, which TI-UK suggest are typically used in money laundering schemes. ¹⁶

The other official justification for UWOs is the fight against organised crime. At the time the draft CFA was introduced to Parliament, the legal and institutional landscape for policing organised crime in the UK was distinctly different to that for policing corruption by foreign PEPs. Since the early 1990s, if not before, domestic organised crime has been the focus of much political attention. It was during this time that the government introduced the National Criminal Intelligence Service, National Intelligence Model and National Crime Squad to deal with crime and criminal groups having a national footprint. Since then, politicians have used organised crime to justify a parade of laws and institutional changes. One of these was the POCA 2002. Not only did it re-energise the recovery of assets after a criminal trial, it authorised the seizure and forfeiture of cash, civil forfeiture and a number of investigative powers. Yet despite all of these changes, the official discourse continues to suggest organised crime remains a significant problem. In detail, the NCA’s National Strategic Assessment of Serious and Organised Crime asserts there are 39,414 individuals involved in 5,866 organised crime groups (OCGs) in the UK. ¹⁷ Of course, not all of these people are potential recipients of UWOs contained within the CFA, for not all will own property worth more than £50,000. However, even after making allowances for overheads and an uneven distribution of income between and within OCGs, it is highly likely that many thousands of individuals could be potential recipients of UWOs (particularly when the legislation also allows for UWOs to be placed on those ‘connected’ to people involved in organised crime). This is because if one accepts these official figures and those that suggest the ‘revenue earned by organised criminals per year’ ¹⁸ from drugs supply, fraud and immigration crime alone is £12,840 million then the average annual turnover for each OCG is £2,188,885 or £325,772 per person, respectively. Given this, it is not surprising the NCA have suggested UWOs ‘will present more opportunities to recover assets’. ¹⁹

Finally, in this regard, it is worth noting other authors have suggested the opportunities for the use of UWOs will be widespread. Philips, ²⁰ for example, highlighted the possibility of a ‘sizeable amount’ of UWOs being granted. He went on to note that in theory, there is ‘nothing to prevent’ the authorities from going after the property of the family members of someone suspected of being involved in a serious crime in the UK or abroad. Indeed, he worried the authorities may begin to ‘rely heavily’ on UWOs, seeking to deploy them for an array of unproven criminal activity against suspected criminals, their families, friends and business colleagues. Similarly, Clifford ²¹ posited the UWOs would ‘substantially assist’ the UK in investigating the illicit wealth of persons overseas. She went on to suggest the: ‘low monetary threshold of £50,000 suggests that UWOs have the potential to be used widely against both persons in the UK and abroad as well as the ultra-rich kleptocrats who were originally billed as targets’. More specifically, on the day the CFA 2017 was passed, the Director of TI-UK reminded the authorities of the £4.2 billion worth of properties the NGO had estimated had been ‘bought with suspicious wealth’ in London alone. He suggested these ought to be a good starting point for the use of UWOs and expressed the TI-UK’s expectation that in the first year of using UWOs, the UK authorities would make a ‘significant dent’ in this ‘low-hanging fruit’. ²² Here, it should be noted TI-UK’s estimate of £4.2 billion was based upon their identification of ‘over 140’ London properties ‘bought by high money laundering risk individuals’. ²³ Six months earlier—when the minimum threshold was expected to be £100,000—The Guardian newspaper also took the view: ‘[h]undreds of British properties suspected of belonging to corrupt politicians, tax evaders and criminals could be seized by enforcement agencies’ under these tough new laws ‘designed to tackle London’s reputation as a haven for dirty money’. ²⁴ It is to this laws that the paper now turns.

The Law on UWOs

An UWO is an investigation tool: ‘specifically designed to support the building of an evidential case for civil recovery under Part 5 of POCA’ (although it can also be used for other reasons provided there is a legal basis for using the information gathered this way ²⁵ ). It should not be confused with those ancillary orders—be they a confiscation order which is issued after conviction in a criminal court, a cash forfeiture order or a civil recovery order—that constitute the final order in the recovery of the proceeds of crime. Instead, one needs to view them alongside other investigative orders—such as disclosure orders, production orders and account monitoring orders—that constitute a means to achieve these ancillary orders. As such UWOs have been designed to lead onto civil recovery, for if the respondent has no reasonable excuse to comply with the requirements imposed, within the time specified, then the authorities can presume that the property was obtained through unlawful conduct. This presumption allows the enforcement authority to initiate the existing civil recovery proceedings to obtain the property, although the respondent would have the opportunity to rebut the presumption the property constituted ‘recoverable property’ in the civil recovery proceedings. ²⁶

Only certain authorities can apply for UWOs. The legislation in England and Wales specifically notes: (the Director of) the NCA, Her Majesty’s Revenue and Customs, Serious Fraud Office (SFO), Crown Prosecution Service (CPS), or the Financial Conduct Authority (FCA). ²⁷ An UWO provides each of these enforcement authorities with the ability: ‘to require an individual or company to provide specific documents or information in order to establish whether the asset(s) in question have been legitimately obtained’. ²⁸ As such, it provides ‘an alternative way of obtaining information’ and allows for action in circumstances where previously ‘it has proved impossible to trace the source of the wealth (to the current standard required by Part 5 of POCA)’. ²⁹ That is, often LEAs had been unable to freeze or recover the assets of persons who were suspected of involvement in or association with serious criminality due to an inability to obtain evidence—often because other jurisdictions were unwilling to cooperate fully. ³⁰ The UWO should enable the authorities to obtain this evidence by other means.

In detail, any application for a UWO must be made to the High Court with or without notice to the respondent. The application must specify or describe the property in respect of which the UWO is sought and identify ‘the respondent’—the person whom the enforcement authority believes holds the property. ³¹

Moreover, in order to be granted a UWO in England and Wales, the enforcement authority has to persuade the High Court of three things—although one of these consists of two parts. The High Court must believe there are either reasonable grounds for suspecting the respondent—or a person connected with them—is, or has been either a PEP of a country outside of the European Economic Area (EEA) or is, or has been, involved in serious crime. ³² In terms of the first part, a non-EEA PEP is an individual who is, or has been, entrusted with prominent public functions by an international organisation or by a State other than the UK or another EEA State. ³³ In terms of the latter, the CFA 2017 refers to the definition of serious crime contained the Serious Crime Act 2007 and it matters not whether the person is involved in serious crime in the UK or elsewhere in the world.

The High Court must also be satisfied there is ‘reasonable cause to believe’ the respondent holds the specified property and that the value of that property is greater than £50,000. Here is does not matter if any other person also holds the property or whether the property was obtained before the introduction of UWOs. ³⁴

Finally, the applicant must persuade the High Court there are ‘reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property’. ³⁵ Applicants must explain the basis for their suspicion by reference to disclosable intelligence or information about, or some specific behaviour by, the individual or company concerned (including open source material from overseas where there may be public registers relating to property and public servants’ income). ³⁶ The determination of the latter will depend on the circumstances in each case, but in doing so the court will, among other things: assume the respondent obtained the property at market value; accept open source material in ascertaining the respondent’s income and will consider income to be ‘lawfully obtained’ if it is in accordance with to the laws of the country from where the income arises. ³⁷

Should the respondent comply in time, then the enforcement authority must determine what, if any, enforcement or investigatory proceedings ought to be taken (this must be done within 60 days if an interim freezing order on the property is in place). However, if no further proceedings are taken at this stage, this does not preclude proceedings commencing in the future. As already noted, if the respondent fails to comply within the time specified without a reasonable excuse, then the authorities can presume the property was obtained through unlawful conduct and the enforcement authority can initiate civil recovery proceedings on this basis. The CFA 2017 makes it a criminal offence to knowingly or recklessly make a false or misleading statement (the punishment for which is up to two year’s imprisonment and/or an unlimited fine). ³⁸

In sum, an UWO demands the recipient disclose the nature and extent of their interest in the valuable property and explain how any costs incurred in obtaining the property were met. The UWO sets out the form and manner the statement should be given, who it should be given to and where it is to be given or sent. ³⁹ By reversing the burden of proof and requiring an individual or company to explain the origin of assets that appear to be disproportionate to income, the UWO ‘should establish whether the individual in question has legitimately obtained the asset or not’. ⁴⁰ Presumably, it is for these reasons the government believes UWO will make it easier for LEAs to recover the proceeds of corruption and other serious crime held in the UK. ⁴¹ Given the logical connection between the law and the rationale for UWOs, the key question becomes what might hinder their use?

Potential Inhibiting Factors

Despite the general lack of literature on the topic, there have been a few suggestions as to what may inhibit the success of the new investigative power. Perhaps the most comprehensive piece of work in this regard is the 2017 study by Keen who suggested:

much of the success of UWOs will depend on a number of variables, including: the government’s political commitment and will; correct resource allocation and expertise within law enforcement; and overcoming the likely challenges law enforcement agencies will face on human rights grounds. ⁴²

Before reading Keen’s work, the author had produced his own list of (three) potential inhibiting factors using a similar inductive approach applied to very different information. ⁴⁵ This list includes the categories of ‘legalities’, ‘attitude’ of those implementing the process and ‘resources’ devoted to it by the professionals and politicians. The main difference between these categories and those of Keen is that the latter also includes ‘inter-agency cooperation’. This dimension did not emerge as a major issue from the data examined for the purposes of this paper (although that is not to say it will not exist). Even after reading Keen’s suggestion, inter-agency cooperation remains excluded from my list of major potential inhibiting factors because the constitutional relationship between investigating authorities in England and Wales or even the UK is not the same as it is in Australia—upon which Keen based much of her analysis. Firstly, there is no obvious need for main investigating agencies in the UK to cooperate, for the NCA, HM Revenue and Customs, SFO and FCA can independently investigate suspects and apply for UWOs. Secondly, if there was an issue the NCA can task these organisations, thus determining who leads the application. ⁴⁶

Before explaining the categories and the reasons for choosing them in more detail, it seems appropriate to note that the three potential inhibitory factors chosen appear obvious when one considers which factors could impact on the use of any criminal justice measure. However, in practice they took far longer to emerge from the inductive approach taken. It is also obvious that there is overlap, if not various relationships, between these three categories of potential inhibiting factors. By way of example, the allocation of resources can be viewed as a tangible expression, if not measurement of, attitude. Resources reflect the degree to which one puts ‘one’s money where one’s mouth is’ to paraphrase a popular expression. Likewise, the outcomes of any legal cases are likely to have an effect on the attitude of those professionals entitled to use UWOs. So, if any challenges succeed and UWOs are difficult to use and do not make it much easier in practice to move to the civil recovery stage, then the category of legalities will have a negative impact on the attitude of the professionals authorised to use them. Conversely, if UWOs make it much easier to generate new assets for policing via civil recovery, these additional resources are likely to impact not only the attitude of the professionals but also on their political masters. Keen also implied a relationship between her variables when she claimed that political will underpins expertise, inter-agency cooperation and resources.

The first of the potential obstacles to the successful use of UWOs is the category I’ve entitled legalities. ⁴⁷ In theory, this category could include Keen’s suggestion that LEAs are likely to face challenges on ‘on human rights grounds’—although she offers little explanation for this beyond the fact such challenges occurred (but failed) in the past. ⁴⁸ However, the main reason this factor is identified as part of this study arises from the reading of other literature on UWOs in the UK, in particular, the work of Bunn who suggested, in 2017, that applying UWO proceedings against a PEP holding ‘high political office’ will be ‘plagued with difficulties’. In detail, she suggested UWOs will not be issued against a serving head of State or a State’s diplomatic agents because the legal concept of ‘personal immunity will act as a procedural bar’. She also suggested ‘other high level Ministers’ were likely to try to rely on the same legal concept because the scope of who can invoke personal immunity ‘is unsettled’ in law. She also implies lower ranked diplomats may try to use ‘functional immunity’ as cover for the boundaries of this concept has not yet been decided. ⁴⁹ Other credible bases for appeals were provided by Brogden in 2016. He suggested it was not entirely clear what the prosecuting authority would be required to show to establish there were: ‘reasonable grounds for believing’ and there are likely to be cases where the decision to grant the UWO may be subject to challenge on the grounds the Judge simply got it wrong or of material non-disclosure. ⁵⁰

The second category of potential inhibiting factors is the attitude of the authorities. This too is very similar to Keen’s ‘political will’ which she claims underpins her other factors—expertise, inter-agency cooperation and resources. Keen appears to have identified political will after noting from the referendum in favour of Brexit, and the ‘general lack of the mention of corruption in the Conservative manifesto’ which she believes ‘calls into question the future commitment of the government in its fight against corruption’. ⁵¹ In contrast, the author arrived at a similar conclusion after reading Trainor’s comments about the Home Office’s impact assessment ⁵² and an interview with the Director of Prosperity (Economic Crime and Cyber Crime) at the NCA—both of which will be considered later. The difference between Keen’s ‘political will’ and this author’s category of ‘attitude’ is the latter also includes the willingness of the professionals in the enforcement agencies to use UWOs.

This takes us neatly onto resources, for as noted earlier, they can be viewed as a tangible expression of attitude, if not a means of measuring the latter. Here, the word ‘resources’ is used to refer both the capacity and capability of the various public institutions that could be involved in the UWO process from the investigation of suspects to the enforcement of civil recovery orders. Once again, Keen had identified a similar factor albeit for different reasons. Keen’s desire to have appropriate resource allocation results from her logical assertion that without a certain level of investment and support throughout investigations and court hearings UWOs will not be used. She also focused on ‘expertise’ because cases using UWOs will be highly complex for they involve serious and organised crime, corruption and foreign PEPs. ⁵³ More specifically, her concern arose because Australia’s use of UWOs suffered from a lack of financially qualified staff and she noted a drain of skilled financial investigators into the private sector in the UK in recent years. ⁵⁴ In contrast, this study’s slightly wider category of ‘resources’ includes both the capacity and capability (and therefore Keen’s notion of expertise) of those entitled to use UWOs and simply reflects the inductively determined view that the actual use anti-money laundering and asset recovery powers against organised crime in the UK has either been hampered by the lack of resources devoted to its policing or the threat of organised crime has been greatly exaggerated. This then takes us to the assessment of these potential inhibitory factors and prediction.

An Assessment and a Set of Predictions

There is little doubt that ‘legalities’ can pose a major inhibitory factor to the success of any legislation in Common Law legal systems such as England and Wales. This is because the judiciary in unique legal cases can determine the finer detail of the law, and novel legislation such as the CFA 2017 often produce cases where the recipients will challenge the prosecution’s interpretation and application of the law. As already noted, various authors have suggested possible grounds for legal challenges to cases involving the use of UWOs. Bunn noted the issue of diplomatic immunity may mean ‘the scope of the UWO regime might not be as wide as some might think’ ⁵⁵ ; Brogden suggested challenges on the grounds ‘the Judge simply got it wrong or of material non-disclosure’, while Keen posited the idea of human rights challenges. Assessing the potential impact of legalities is a tricky one. It is very likely some people will challenge the use UWOs. Earlier attempts to use human rights to challenge the use of civil powers for such public ends have had little impact and it is difficult to see why this would be that much different with this investigative power. No doubt, there will be cases where, to quote Brogden, individual judges: ‘simply got things wrong’. The use of UWOs may even produce cases that help define the legal parameters of functional diplomatic immunity. However, it is assumed the potential for a conflict with the general issue of diplomatic immunity would have been noticed when drafting the legislation. Indeed, one wonders whether the inclusion of ‘associates’ in the wording of the legislation is an acknowledgement of the issue in that it provides a means of going after some of the wealth of otherwise immune targets in an indirect manner. Here, it is suggested those who drafted the legislation will have realised UWOs—like other laws—cannot be used against highest ranking officials who have diplomatic immunity and that via this route only their unprotected associates and the less-shielded EEA-PEPs can be subject to UWOs in practice. If this assumption is correct, the issue of immunity provides a credible legal reason for assuming the scope of potential corrupt recipients of an UWO ‘might not be as wide as some might think’. ⁵⁶

Whatever the actual outcome of legal challenges, here it is argued that the category of legalities are likely to have relatively less influence on the overall use of UWOs in the initial years than the other main inhibitory factors. This is partly because any successful grounds for limiting the use of UWOs will take a small number of years to work through the legal system. However, the main reason is that the attitude of the authorities will have more of an immediate impact and it is to this category of potential inhibitory factors that the article now turns.

Despite making many enthusiastic claims about UWOs, it appears the authorities do not have the will to apply UWO in hundreds or thousands per year in the first instance as one might expect given the number of individuals involved in organised crime. Ironically, one basis for making this claim is the Home Office’s own impact assessment on UWOs. This is not a reference to the fact the impact assessment envisages no attempts being made in the first year as the legislation ‘beds in’, rather it is because the impact assessment estimates the authorities will apply for only 20 UWOs per year and believe only 8 of these will lead onto actual civil recovery. ⁵⁷ A second reason for suggesting the authorities hold a restrictive attitude to the use of UWOs is the fact that the Director of Prosperity (Economic Crime and Cyber Crime) at the NCA suggested the number of UWOs will ‘be small’, particularly in terms of ‘international corruption’. ⁵⁸ Unfortunately, he did not go on to specify the exact number or numerical range he had in mind when he used the word ‘small’ but he did reveal the specialist corruption unit set up in June 2015 had ‘25 live investigations for international corruption’. ⁵⁹ This information is important because the NCA is the investigating agency most likely to apply for UWOs and it will have a near monopoly on those issued against corrupt overseas PEPs owning property in the UK. There are a number of reasons for suggesting this. The FCA carries out investigations but has no experience of applying for civil recovery orders never mind UWOs and at the time of writing its website did not even mention the latter. ⁶⁰ Like the FCA and NCA, the SFO has experience of investigating crime—especially bribery and corruption by UK nationals—and applying for civil recovery orders but it is much smaller in terms of staff and deals with far fewer cases than the NCA. The NCA is also the main agency for investigating both serious and organised crime and international corruption in the UK, ⁶¹ hosting as it does the International Corruption Unit—a unit that brought together investigation and intelligence units from the Metropolitan Police Proceeds of Corruption Unit, the City of London Police Overseas Anti-Corruption Unit and elements of the NCA Economic Crime Command. ⁶² Another reason to value the comments of the Director of Prosperity (Economic Crime and Cyber Crime) at the NCA is the fact the SFO, CPS and FCA are all represented on the NCA’s Economic Crime Command Strategic Governance Group headed by the Director. ⁶³ The CPSs has the authority to apply for UWOs and has experience of civil recovery, but it does not carry out investigations and it now appears that individual police forces will be able to suggest cases to the CPS although was not the initial impression given by the government. ⁶⁴

In the light of this information from the head of the NCA’s Economic Crime Command Strategic Governance Group along with the information contained in the impact assessment, the first prediction is there will be fewer than 20 anti-corruption applications per annum in each of the first two or three years. Here, it is suggested the Director of Prosperity’s estimate reflects his view of the capability or capacity (resources) of the NCA (or another part of the system) rather than his organisation’s attitude to policing corruption and organised crime per se. However, given the number of people the NCA claims are involved in organised crime and the fact others—including local forces—are authorised to apply for UWOs, it is likely a handful more UWOs may be applied for in the first year as many await the outcome of the initial cases brought by the NCA. As for whom these recipients might be, it is suggested they are likely to be known to law enforcement already. Particularly, if the authorities take the same approach as the Assets Recovery Agency (ARA) took towards its use of civil recovery orders. Many of those the ARA initially targeted were the low-hanging fruit, the so-called ‘fled and the dead’. It is suggested the professionals will do the same again as they familiarise themselves with the law and aim to avoid negative media headlines. In this regard, it is predicted many of the recipients of the first wave of UWOs will be those involved in corruption abroad and will constitute the ‘fled and the politically dead’. The difference with the earlier use of civil recovery orders being the many properties targeted with UWOs will belong to foreigners who will have fled to (or at least chosen to invest in) the UK and who are alive (because unlike civil recovery orders UWOs cannot be made in rem), but the owners will have little political capital with their government at home.

Unless the case law reveals UWOs were so badly drafted they are of little use against both corrupt PEPs and domestic organised crime, the third prediction made here is the use of UWOs will increase in the short to medium term. This upward trajectory is in line with the history of another order aimed at organised crime. When selling the idea of Serious Crime Prevention Orders to Parliament in 2007, the government estimated ‘there might be some 30 or so serious crime prevention orders a year’. ⁶⁵ Less than a decade later, 338 Serious Crime Prevention Orders were obtained by police forces in England and Wales in a single year. ⁶⁶ Of course, the two types of orders are quite different, but these statistics show that impact assessments can be quite inaccurate. However, the main reasons for predicting the use of UWOs will increase in the short to medium term are the numbers are likely to increase as the practitioners become more familiar with the legal procedures and some of the legalities have been determined. Even a limited use of UWOs could have a significant impact on the value of assets gathered via civil recovery and this in turn should have an impact upon the attitude of those who manage the front-line professionals, if not the outlook of the politicians themselves. Let me explain. If the value of property held by corrupt PEPs in London is on a scale estimated by TI-UK, then success in one average case would produce at least £28.187 million for civil recovery. ⁶⁷ This sum alone would almost quadruple the amount gained via the use of civil recovery and taxation powers ⁶⁸ by the NCA in 2016–17 and it is just a few hundred thousand pounds less than £28.3 million recovered by the NCA using all routes that year. ⁶⁹ Indeed, if UWOs facilitate only a small number of successful civil recovery cases of this size, the outcome could create a step change in the attitude of the politicians and professionals towards their use. That said, if all the assets recovered from corrupt EEA-PEPs go back to the countries of origin, this financial incentivisation will not exist and the annual number of anti-corruption cases involving UWOs are likely to remain much smaller.

Nevertheless, even if the scope of the use of UWOs recovered from non-EEA PEPS is limited by diplomatic immunity or a lack of large financial incentives, this does not prevent the NCA and others using this new investigate power to go after the billions allegedly made by each year by organised crime. Indeed, one wonders whether grand corruption was ever the real target of UWOs. As already noted, the initial minimum threshold for the use of UWOs was set at £100,000, yet this figure constitutes only one fifteen of the value of average price of property (£1.5 million) under investigation by the Metropolitan Police’s Proceeds of Crime Unit as the draft legislation was being contemplated by the government in 2015. ⁷⁰ The £28.187 million average price of property implied by TI-UK’s claim over 140 suspect properties in London were worth £4.2 billion is over 280 times the value of the initial £100,000 minimum threshold.

As the Criminal Finances Bill went through Parliament, this initial de minimis threshold was reduced to £50,000 following suggestions from MPs who live in areas where property prices are much lower than those in London. Such a reduction in the minimum threshold should be no surprise to those familiar with the history the POCA. Among other things, the POCA enabled the authorities to seize cash and use civil courts to enable the forfeiture of these assets. At first, the cash that could be seized had to be in bundles of £5,000 or more—presumably, because the law was aimed at organised crime. Later this threshold was reduced to £1,000 as the process became ‘mainstreamed’. The author thinks the same process of officially mainstreaming the procedure will happen in regards to UWOs, and so the fourth prediction is the de minimis threshold of £50,000 will be reduced, if not abolished, in the next decade if the cost of obtaining one remains in the region of the amount suggested by the government. ⁷¹

Conclusion

The CFA 2017 introduced various changes to the UK’s anti-money laundering and asset recovery regime, one of which was the UWO—a civil investigative power that requires the recipient to disclose their interest in property valued at over £50,000 and to explain its funding. If the answer to the UWO is unsatisfactory, the information gathered can be used to apply for a civil recovery order. The official literature reveals that UWOs were primarily justified by reference to the problems of policing the placement of the proceeds of crime in UK property by corrupt PEPs from outside of the EEA. The prominent secondary aim was to use them to combat serious organised crime within the UK. Thus, the Home Secretary declared UWOs are ‘an important new tool to tackle not just corruption but wider organised crime too’ which would ‘significantly improve’ the authorities ability to tackle money laundering and corruption.

In theory, UWOs look like they could significantly improve the authorities’ ability to tackle the possession of the proceeds of crime by both organised crime in the UK and corrupt politically exposed persons from countries outside the EEA—but not that against PEPs with diplomatic immunity. However, evidence from the UK, if not elsewhere, suggests the issues of legalities, attitude and resources is likely to inhibit their use. So while UWO could have a significant impact on those corrupt non-diplomats who have invested their proceeds of crime in the UK and on individuals involved in organised crime in the UK if an appropriate level of resources is provided to those involved in the process, it is unlikely there will be a ‘sizeable use’ use of the investigative orders in the first few years given the government’s impact assessment and comments from the head of the Director of Prosperity (Economic Crime and Cyber Crime) at the NCA. This should be a comfort to Philips but a disappointment to TI-UK who hoped UWOs would make a ‘significant dent’ in the one hundred and forty or so of questionable London properties the anti-corruption NGO had identified.

The first prediction made here is there will be fewer than 20 anti-corruption applications per annum in each of the first two or three years coupled with a few other cases. It is likely the use of UWOs will increase from the 20–25 predicted in the first few years unless the legal issues become a particular problem. Unless their use becomes politicised, many of the recipients of the first wave of UWOs will be those involved in corruption abroad and will constitute the ‘fled and the politically dead’. Yet a few successful anti-corruption cases of the size suggested by TI-UK could provide enough assets to resource the use of UWOs on a much larger scale if a large proportion of the assets recovered remain in the UK. These assets from policing could lead to far more policing of assets if the High Court itself has the capacity to hear many applications for unexplained wealth and civil recovery orders. Otherwise, their use is likely to increase slowly but surely in the short to medium term as they are used primarily against individuals connected to organised crime in the UK. It is predicted this group will soon become the mainstay of UWOs. Perhaps after an initial wave of high value cases involving foreign owners of property in the UK. Indeed, it is likely the de minimis threshold of £50,000 will be reduced, if not abolished, in the next decade as their use becomes ‘mainstreamed’.

However, at a time of reductions to law enforcement and criminal justice budgets, it is difficult to envision a widespread use of UWOs on the scale hoped for by some, feared by others. The only way the author can foresee this is the attitude of the government changes and it decides to do one of two things. The first is it decides to give far more resources to those entitled to use UWOs in order to generate far more assets for policing. The second is it decides to politicise the use of UWOs in order to punish unfavoured regimes—for example, that of Putin in Russia. The former makes more sense and is easier to do in practice. Indeed, it may occur if UWOs are viewed as producing a step change in asset recovery in the next few years. The latter is more problematic in both theory and practice. Firstly, the politicisation of (a civil aspect of) the criminal justice process sets a dangerous precedent. Secondly, an attempt to ‘punish’ a regime by going after the assets of its nationals is not as straightforward as it may seem. That is, if these recipients are not members or associates of the regime—then how could use a concerted use of UWOs against such people punish the regime? Moreover, assuming each UWO led to a civil recovery order, what would one do with the assets recovered? Repatriating these proceeds of crime would be adding to the coffers of the rogue regime. Keeping such proceeds of crime would mean keeping the proceeds of overseas corruption for oneself and failing to help the people from whom it has been stolen. This latter argument remains even if the recipients of UWOs were aligned to the rogue regime. In this scenario, returning the proceeds of crime from associates to the regime itself would have a certain disruptive impact on the families concerned, but it would still allow the rogue regime to keep the proceeds or re-imburse its members or associates in one way or another. The only sensible option in such circumstances would be to put the proceeds into a temporary bank account and to return them when a more favourable regime came into power, but this might not be for quiet a while. The dilemma for those who would politicise ⁷² the use of UWOs, is would this outcome be worth the reputational risk to UWOs, if not the UK’s asset recovery or criminal justice systems? In all, only time will tell whether any or all of the predictions made here will come true, but in the meanwhile there is no doubt ‘…how and against whom UWOs will be used is something to watch’. ⁷³