Unexplained Wealth Orders – A presumption of guilt?
The individual who was made the subject of the UK’s first Unexplained Wealth Order (UWO) in February this year has been named as Zamira Hajiyeva. She is the wife of Jahangir Hajiyev, the former chairman of the International Bank of Azerbaijan.
Background to the UWO
The lifting of Mrs Hajiyeva’s anonymity came about after she unsuccessfully brought a challenge to the UWO before the High Court yesterday.
In 2016 Mrs Hajiyeva’s husband received a prison sentence of 15 years, and was ordered to repay $39 million, as part of his conviction for a reportedly major fraud and embezzlement scheme.
In seeking to refute Mrs Hajiyeva’s High Court challenge and defend the imposition of the UWO, the National Crime Agency (NCA) presented evidence of the couple’s lavish spending habits to the court including:
- Mrs Hajiyeva having spent £16 million at Harrods over a period of 10 years
- The couple having two bays within the private Harrods car park
- Mrs Hajiyeva having bought a $42 million Gulfstream jet
Mrs Hajiyeva has asserted that her husband is a legitimate businessman who had become independently wealthy through a sequence of ventures before taking up a role with the Bank of Azerbaijan. The NCA, however, had pointed out that Mr Hajiyev had been a state employee from 1993-2015, and would not have been able to legitimately amass the wealth traced to the couple.
Under the UWO’s terms, Mrs Hajiyeva will be expected to provide the NCA with a full account of how she and her husband could afford to buy their home £15 million home in Knightsbridge.
What is a UWO?
UWOs were introduced under the Criminal Finances Act 2017. A UWO is an order of the High Court requiring a person to explain their interest in a property. Certain authorities can apply for a UWO against individuals.
A person can be the subject of a UWO if:
- That person is reasonably suspected of being involved in or connected with a serious crime, or
- That person is a politically exposed person from outside the European Economic Area (EEA)
If made the subject of a UWO, a person will have to explain their interest in the subject property where its value is greater than £50,000 and there are ‘reasonable grounds’ to suspect that the respondent’s known lawful income would be insufficient to acquire the property.
Provided the above criteria are fulfilled, certain enforcement authorities – the NCA, HMRC, the Financial Conduct Authority, the Serious Fraud Office and the Crown Prosecution Service – have the power to make an application to the High Court.
Points to note
- The burden of proof is reversed. If a person subject to a UWO fails to respond to a request for an explanation, there is a presumption that the subject property has been purchased with illegitimate funds and will be recoverable in civil recovery proceedings.
- The standard of proof is that there must be ‘reasonable grounds’ for suspicion. This is lower than the criminal standard of beyond all reasonable doubt.
- It is a criminal offence to knowingly make a false statement in response to a UWO.
- Where an authority does not have the power to apply for a UWO, it may refer the matter to one of the other enforcement authorities.
- UWOs are a fundamentally investigative measure, they do not automatically implicate the subject.
UWOs are a recent addition to the arsenal of abilities that UK authorities can use to target the proceeds of crime, the extent to which they will be used still remains the subject of speculation. The case of Mr and Mrs Hajiyev is noteworthy as the first time that this new power has been exercised.
Transparency International UK, an organisation dedicated to heightening awareness of, and counteracting corruption, has previously stated that they have identified £4.4bn worth of ‘suspicious wealth’ in the UK. A considerable portion of that potentially illegitimate wealth is thought to be vested in the London prime property market.
With these economic circumstances and the ever-mounting political pressure to clamp down on the proceeds of crime, it is possible that the case of Mr and Mrs Hajiyev will result in the use of UWOs becoming far more prevalent in the near future.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.