The Unexplained Wealth Order (UWC) is an initiative established by the UK government to probe into people whose income sources and pattern of expenditure became questionable to financial regulators. It is an investigative order obtained in the High Court by prosecuting authorities (i.e. the National Crime Agency, HMRC Authorities and Crime Prosecuting Service) where legal action is taken or made against any politically exposed person (either domicile or non-domicile) and individuals who were found to be suspects of being involved in serious crimes (including fraud, money laundering, tax evasion, sanctions offences, or bribery and corruption). The order relates to properties of any kind in possession of an individual to the tune of £50,000 or when it is suspected that the individual does not have sufficient legitimate access to large amounts of income to acquire that property.
The effect of the order is that the individual can be required to provide information on how he or she acquired the property and establish the motive for the purchase. Failure to provide evidence of how the property was obtained would property being seized. The provision of false information can lead to the prosecution of up to two years’ imprisonment, a fine, or both. A simultaneous freezing injunction may also be imposed prohibiting the movement or sale of the property. The order is a crucial part of the Government’s campaign to challenge illicit finance and give law enforcement the tools needed to tackle high-value money laundering.
An example of the use of the UWO is the case of Zamira Hajiyeva, the wife of the former chairman of a state-owned bank in Azerbaijan who was imprisoned on fraud charges. Her husband, Jahangir Hajiyeva, a former chairman of the International Bank of Azerbaijan in 2016, was sentenced to 15 years in prison on charges of fraud, embezzlement and misappropriation of £2.2 billion of public funds. Just after, his wife relocated to the United Kingdom and spent significant amounts of money on purchases totalling over £16.3 million between 2006 and 2016 at London’s upmarket department store Harrods, a five-bedroom house in Walton Street, Knightsbridge, close to Harrods, for £11.5 million, a 170-acre Millenormous Golf and Country Club in Ascot, Berkshire, for £10.5 million and $42 million on a Gulfstream G550 jet. These lavish lifestyle expenses caused the British authorities to investigate Zamira applying the UWO. Two years ago, Hajiyeva became the first person to receive an UWO under the new anti-money-laundering legislation introduced by the Criminal Finances Act 2017.
The implication of the UWO for your organisation
EBII Group believes that the UWO has the potential to curb money laundering transactions into the UK. Some non-domiciles in the United Kingdom transfer these vast amounts of monies into the country with very complex traceability codes; by so doing, they evade tax obligations while spending extravagantly. To avoid being implicated in these cases:
- Financial institutions, lawyers, accountants, and corporate service providers are encouraged to guard the financial market. Some financial institutions would want capital appreciation or improved liquidity, but such illegal funds are not supported. While they may provide short-term funds, in the long-term, they may cause severe financial and reputational damage.
- Application of the international Anti-Money Laundering Standards obliges banks to conduct enhanced due diligence on policially exposed individuals, including identifying and verifying their source of funds and source of wealth. Applicable organisations are also expected to identify the real individuals behind legal entities (beneficial owners) and report suspicious activities to relevant authorities. Therefore, AML protocols must be judiciously adhered to.