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For some time the UK has been accused of being a hub for dirty money – especially London’s prime property market. Unexplained Wealth Orders (UWOs) give law enforcement an opportunity to confiscate criminal assets without ever having to prove that the property was obtained from criminal activity. 

Origins of UWOs

The Proceeds of Crime Act 2002 introduced Civil Recovery Orders (CROs) to help tackle the problem. CROs permitted the confiscation of criminal property using a lower “civil” standard of proof. Instead of needing to prove a crime was committed, law enforcement bodies only needed to show a court that on the balance of probabilities (or “more likely that not”) unlawful conduct had occurred, and that the property was obtained as a result of that unlawful conduct.

However, use of CROs was limited to exceptional cases where the prospect of criminal prosecution was unavailable or undesirable. It didn’t help in the most difficult cases, such as where concrete evidence was hard to obtain because the alleged launderer was part of, or had the support of, a foreign regime.

The Criminal Finances Act 2017 therefore introduced Unexplained Wealth Orders (UWOs). Nicknamed “McMafia Orders” (after the book and TV series of the same name), these went a step further than CROs. Targeted at people linked with serious crime or who hold public office outside of Europe, they allow law enforcement to apply for a court order requiring someone to explain their interest in property and how they obtained it. If that person fails to comply, law enforcement may then apply to the court for a CRO with the benefit of a presumption that the property should be confiscated.

Use of UWOs

Although they have been available from January 2018, the use of UWOs has been limited. By February 2022 only nine orders had been issued, relating to four cases. None have been obtained since the end of 2019. There have been high-profile successes and failures.

A similar regime in Australia has also had limited success, whereas that in Ireland is credited with having significantly disrupted economic crime.

A UK Government money laundering risk assessment concluded in December 2020 that money laundering has probably increased since 2017, suggesting that UWOs are yet to have the desired impact in the UK.

Reform of UWOs

In March 2022 the Government fast-tracked passage of the Economic Crime (Transparency and Enforcement) Act 2022 in response to the Russian invasion of Ukraine. The Act introduced significant reforms to the UWO regime, intended to make them easier to obtain, enforce and monitor. Our briefing on the Act discusses those reforms in more detail.

A Government fact sheet relating to the Act noted that it was difficult to say whether the Act’s reforms would increase the number of UWOs obtained, but that “even a single UWO will have a high impact”.

Wider action on money laundering has been set out in the Government’s Economic Crime Plan 2019 to 2022, as discussed in our briefing Economic crime in the UK: a multi-billion pound problem.

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