The High Court has ordered that three unexplained wealth orders (UWOs) obtained by the UK National Crime Agency (NCA) should be discharged. The UWOs related to three properties in London owned by offshore companies. They all had interim freezing orders attached to them. We reported on the cases at the time when the challenges to the UWOs were being heard in March 2020 (see our post here). The NCA has indicated in its own press release that it intends to pursue an appeal against the decision.
This is the first publicised case in which UWOs have been successfully challenged. The challenges were based on submissions made on behalf of the subjects of the UWOs that:
- The NCA made errors of law in its approach to the application of the statutory requirements for UWOs
- There was material non-disclosure by the NCA at the initial hearing (which was an ex parte hearing, meaning that the subjects of the orders were not given notice of or present or represented at the hearing) and that the NCA had not undertaken adequate enquiries and
- Additional relevant information which had come to light since the hearing at which the UWOs were made demonstrated that the UWOs had been sought and made on a flawed basis.
Accepting most of these submissions, the court reiterated and clarified some important principles, not only in relation to the requirements for making UWOs but also more generally about what may safely be assumed to be the proceeds of crime for the purposes of UK anti-money laundering (AML) legislation. In particular, the Court took the opportunity to make clear that the principle established in other types of AML cases that the fact that property is held through complex offshore structures or trusts does not necessarily mean that those structures are being used for the purposes of money laundering.
UWOs are still a relatively new investigative tool, and the NCA has been clear that it is not afraid of taking difficult cases in which it may be challenged as it has been in this instance. That strategy looks set to continue. The NCA has underlined the importance it attaches to this case as a blueprint for how UWOs will be handled in future. In its Annual Plan released last week, it confirmed that it has obtained 12 UWOs in total since it acquired the powers to do so in 2018 and that it is committed to “focusing on individuals operating at the high end of high risk”, including through the use of UWOs.
The NCA is tenacious. We have been very clear that we will use all the legislation at our disposal to pursue suspected illicit finance and we will continue to do so.