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Heavy burden slows use of Unexplained Wealth Orders

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A lack of clarity on the road ahead

A report in The Times that unexplained wealth orders (UWOs) have been used only three times since being introduced – all against the same person – raises questions about the desire of UK authorities to exercise the power they gained early last year.

Unexplained Wealth Orders grant five UK authorities the ability to apply to a judge to shift the burden of proof to an owner of an asset worth more than £50,000 to demonstrate a legitimate source of funds for its purchase where an authority can show a gap between the target’s earnings and the asset value. The orders allow for confiscation of the asset if legitimate ownership cannot be proven, and are targeted at politically exposed persons (PEPs) and beneficiaries of major criminality.

Yet while the UK has of late been criticised by campaigners viewing its receptiveness to inward investment as a vulnerability to money laundering, disparagement of the authorities in this instance appears misplaced. The National Crime Agency has already stated publicly it is working up a number of cases, wrestling with a relatively new power and guidance. The credibility of the UWO regime could be fatally undermined from the off if its initial uses are unsuccessful, and the authorities should expect no easy ride when they seek to exercise the power (as indeed they have not in the one case of usage involving the wife of a banker accused of corruption).

So serious are the consequences – both economically and in terms of reputation harm – that targets will robustly defend their position. Those facing allegations of wrongdoing or questions around the source of their funds are increasingly factoring in this risk in developing their legal strategies.

But perhaps more than that, in cases where serious corruption or kleptocracy is alleged it often takes many years to unpick money trails and source of funds, and possible innocent explanations would need to be excluded. Given the high penalty subjects would face – and the substantial harm they would allege if authorities get an application wrong – it seems the UK is simply wielding its great new power responsibly.