Changes to Unexplained Wealth Orders in light of the Russia and Ukraine conflict
14 APR 2022
Unexplained Wealth Orders (UWOs) were introduced to the UK in 2017. It is an investigatory order placed on the respondent whose assets appear to be disproportionate to their income to explain the origins of their wealth. A UWO can be used by authorities that investigate crimes when they believe that property has been used for money laundering of proceeds of crime. Consequently, the order gives the owner an opportunity to explain the origin of the property and thus retain it. If the person in question fails to give a sufficient explanation, they may lose the property in question.
How it works
A UWO can be ordered when the person in question does not appear to have funds from their lawful income to have paid for property worth more than £50,000.
The scope of UWOs
The High Court must be satisfied that the person is a non-EEA politically exposed person, an individual who is, or has been entrusted with prominent public functions by an international organisation or a state outside of the UK or the EEA. It additionally includes family members and close associates.
There are reasonable grounds for suspecting that the respondent is, or has been, involved in serious crime (whether in part of the United Kingdom or elsewhere), or are connected to someone who is.
Why is this relevant in today’s climate?
The certified agencies have found it very difficult to succeed with UWOs, with only nine obtained to date. Therefore, in light of the conflict between Russia and Ukraine, a reform was necessary to give UWOs more powers. Consequently, the British government decided to respond to criticism of the lack of targeting money laundering by individuals both in the UK and abroad through UK property by introducing The Economic Crime (Transparency and Enforcement) Act 2022.
Reform of UWOs
- Expanding the scope of persons and property subject to a UWO
The new reforms include “specified responsible officer”, thereby including directors, and ensuring that targets cannot hide behind complex ownership structures, which was seen as the principal reason for UWOs ineffectiveness. As well as, allowing UWOs to be sought against property held in trusts and other complex ownership structures such as opaque foundations.
- Establishing a lower test for the grant of a UWO
It will now be sufficient, if the court is satisfied that there are reasonable grounds for suspecting that the property has been obtained through unlawful conduct.
- Allow for a longer extension for interim freezing orders
From 60 days up to 186 days after a UWO has been complied with, giving the enforcement authority more time to review if there are grounds to proceed to a civil recovery.
- Protections for the enforcement authorities
Most importantly, limiting an enforcement authority’s liability for costs in proceedings about UWOs or interim freezing orders.
- Investigation time period
Removal of key barriers to the use of UWOs provides more time for law enforcement to investigate and review the evidence in response to a UWO.
What is the practical effect?
While these changes are helpful in strengthening UWOs powers, reform may not be so revolutionary. It remains uncertain how these new provisions will assist HM Government enforcement agencies, having additional time to investigate will not solve issues if the evidence resides in another jurisdiction, where legal co-operation may be non-existent. Perhaps further reform is necessary as these changes do not address the potential human rights issues of the low threshold, which potentially brings a wide range of people under the radar having to justify their income, which has drawn criticism to the invasive nature of UWOs.
Encapsulating, it is clear these reforms signal a new level of intent for enforcement agencies.
Yulia BarnesManaging Partner
Yulia Barnes is our Managing Partner. She is an experienced solicitor and advises on a wide range of contentious and non-contentious matters for both private and corporate clients.Yulia started her legal career at a large international Magic Circle firm. She then became a partner at a regional law firm and headed a Dispute Resolution Department. She then moved in-house before starting her own Boutique practice, Barnes Law, with the aim of providing exclusive services to high net-worth individuals and privately-owned businesses. More details can be found on her LinkedIn profile.
Expertise Yulia and her team are widely recognised for their professional and practical approach to matters. She is committed to ensuring that her clients’ objectives are achieved in the most cost-effective way possible.
Approach Yulia has a wealth of experience working with businesses of all sizes: from large multinational corporations to start-ups. She has particular expertise in a hospitality industry, investment funds, private and corporate clients, and focuses on startups and technology-driven companies. Yulia brings the same level of attention to detail, professionalism and a personal touch to every case and client, and truly immerses herself in her clients’ businesses. She prides herself on her problem-solving, commercially astute approach and her track record of partnering with clients to help them achieve their strategic objectives.
Will joined Barnes Law as an Associate Solicitor in Spring 2023, shortly after qualifying in September 2022.
Will works mostly on real estate and corporate/commercial matters. Will enjoys providing advice on transactional matters.
Away from the office, Will can be found reading or playing golf. While he played rugby until university, and rowed throughout his degree, he now tends to watch both from the sidelines. During the winter he can also be found skiing.
Will plans to continue developing his legal skills and experience at Barnes Law, under the expertise and guidance provided by Yulia.
Mark is an experienced solicitor whose practice areas include intellectual property (IP), IT, data protection and general commercial law.
Mark advises businesses of all sizes – from sole traders to corporations. Among his clients are: clothing and lifestyle brands, restaurants and food suppliers, IT companies, banks, hedge funds and venture capital firms, education providers, medical and pharmaceutical brands.
Outside of his practice, Mark also advises members of the Institute of Directors as part of its Directors’ Advisory Service.
- Prosecuting a UK trademark application on behalf of an education provider and representing them in related UK IPO opposition and revocation proceedings;
- Advising a publisher and a delivery business on data protection matters, B2B and B2C Ts & Cs of sale, website and app Ts & Cs, all aspects of global brand protection;
- Advising footwear brands, alternative asset managers and hedge funds on their global brand protection, including overcoming various refusals, representing them in opposition proceedings and settlement negotiations;
- Representing a central bank in opposition proceedings before the UK IPO;
- Advising a lifestyle brand concerning trademark clearance and protection, negotiations for a website/app development and maintenance agreement.
Ioulia TatawatFamily Law Adviser
Ioulia has a solid background in family law and offers guidance, clarity, and support to clients during one of their most challenging times in their life.
She advises on all three pillars of separation: divorce, children matters and financial settlements. Ioulia is a member of Resolution and is keen to try to settle matters at early stages.
Ioulia is dedicated to assisting clients and navigating them through their legal matters with clarity and support.
Alex joined Barnes Law in September 2023 after finishing his master’s degree in law. Prior to joining Barnes Law, Alex worked in property litigation at Ashfords. Alex assists Yulia on a variety of both contentious and non-contentious matters.
Outside of the office, Alex enjoys reading and hiking. Prior to working in law, Alex was a competitive tennis player.
Alex continues to develop his skills in legal practice under Yulia’s guidance, he plans to sit the Solicitor’s Qualifying Exams (SQE) in 2024.
Mehves joined Barnes Law in August 2023, right after graduating from Queen Mary, University of London (LLB Senior Status). As part of her qualification journey, Mehves is currently pursuing her Legal Practice Course (‘LPC’) at the University of Law. She also holds a degree in European Union Law from Maastricht University, Netherlands.
Mehves works closely with Yulia on a variety of contentions matters and also writes Barnes Law’s legal blogs, manages social media accounts and is responsible for marketing.
Outside of work and studies, she enjoys running, tennis and yoga.
Mehves is looking forward to developing her legal skills at Barnes Law.
Julia PodgornovaInvestor Relationship Manager
Julia guides clients in making important business decisions based on comprehensive risk assessment and strategy. She supports investors in devising strategies designed to maximise each business’s potential from pre-seed to IPO.
Julia’s particular area of expertise are IT start-ups at different stages. Julia supports business through their fund-raising journey. As an Investor Relations Manager, Julia communicates with investors to facilitate a smooth round and legal part of each transaction.
In her free time Julia enjoys sailing, ballroom dancing, art exhibitions and travel.