The National Crime Agency (“NCA”) have signalled their intent to crack down on organised crime, by striking crime bosses where it hurts the most, the pocket. Much like the FBI investigation of Al Capone, the NCA have set their sights on the finances of UK crime bosses, by obtaining the first “domestic” Unexplained Wealth Order (“UWO”).
The UWO was granted on 12 July, in respect of properties linked to an unnamed businessman from the North of England. The properties are suspected to have been purchased with the proceeds of serious crime including drug trafficking as well as the supply of firearms. This investigation relates to eight properties, and the businessman in question will need to disclose the source of the money that was used to purchase the properties.
Intended to clean up Britain’s reputation as a haven for dirty money, in March 2017 Transparency International identified £4.2 billion of London properties had been purchased with suspicious sources. The initial UWOs obtained by the NCA have focused on illicit foreign money. The UWO obtained in respect of Mrs Hajiyeva, the wife of the former chairman of the International Bank of Azerbaijan, related to an £11.5 million property near Harrods. Subsequent UWOs obtained in May of this year concerned London properties purchased for more than £80 million.
Donald Troon, director of economic and cybercrime at the NCA said upon the introduction of UWOs that:
“unexplained wealth orders have the potential to significantly reduce the appeal of the UK as a destination for illicit income."
UWOs are made in cases where an individual owns a property, but his or her known lawful income is insufficient to have purchased it. The individual must be either a politically exposed person or else involved in serious crime. The UWO requires the individual to disclose how exactly the property had been purchased. What is significant about UWOs is that they allow the authorities to require an individual to provide them with financial information before that individual has actually been convicted of any criminal offences.
This latest UWO displays a change of tack from the NCA, by targeting serious national crime as well as corrupt foreign officials. The potential to use UWOs in relation to domestic criminals is an interesting development in this area. The NCA have shown that they are determined to tackle the use of illicit funds to acquire property regardless of whether the funds originate in the United Kingdom or abroad.
Andy Lewis, the Head of Asset Denial at the NCA, said:
“These orders are a powerful tool in being able to investigate illicit finance generated within, or flowing into the UK and discourage it happening in the first place.”
The UWO is an important weapon in the ongoing fight against organised crime. Until now they have only been used sparingly. However, in my view, we can expect to see many more UWOs be issued as the NCA become more familiar and confident with their use, particularly in relation to domestic crime bosses. As their use increases so will the risks of family members and third parties being caught in the middle of complicated investigations.
It remains to be seen how often UWOs will be used to prevent domestic criminals from laundering the proceeds of crime and whether they will be effective in their aim. The signs are that the NCA are determined to deploy them effectively to address the flow of dirty money in the UK economy, which is certainly a step in the right direction.
This article was originally published in Economia magazine on 1 August 2019, and can be viewed in full here.
Gary Pons, barrister at 5 St Andrew’s Hill, specialises in complex financial cases often with a multi-jurisdictional element.