The wife of a wealthy banker has failed in a High Court challenge to the UK’s first ever unexplained wealth order, and must now provide evidence to the National Crime Agency that she was able to afford £22m worth of UK property.
In a judgment passed this week Justice Supperstone dismissed the attempt by ‘Mrs A’, who cannot be named for legal reasons, to strike off the National Crime Agency’s (NCA) application for two unexplained wealth orders.
Brought in via the Criminal Finances Act 2017, an unexplained wealth order (UWO) allows government agencies such as the NCA or HMRC to investigate the source of funds used to acquire an asset where its owner does not appear to have sufficient income to have made the purchase.
In February 2018 the NCA applied for two UWOs requiring Mrs A to explain how she had funded and purchased two properties in the South East of England, valued in the region of £22m. According to the NCA, one property was bought by an offshore company in the British Virgin Islands, allegedly using stolen funds, while the agency filed another UWO with the High Court against a UK property it believes she owns.
Mrs A is described by the NCA as a politically exposed person from a non-EEA country. During the trial hearing, the court heard that her husband had been chair of a partially state-owned bank in the same country, but is currently in prison after being convicted of fraud and embezzlement offences relating to the bank.
The court also heard details of Mrs A’s lavish spending habits, which included records showing that she spent £16.3m at luxury department store Harrods over the course of a decade.
In July 2018 Mrs A challenged the UWOs, but this week’s ruling dismisses that challenge in full. The properties remain frozen, and if Mrs A either fails to respond or provides an inadequate response this can be used as grounds to pursue confiscation of the properties through civil proceedings.
The UWO powers are intended to help UK law enforcement tackle the flow of illicit cash into the UK, and came into force earlier this year. This case is the first UWO filed by the NCA.
To obtain a UWO, a designated government agency such as the NCA or HMRC must apply to the High Court and show “reasonable cause” that the suspected person holds property or assets worth more than £50,000, and there are “reasonable grounds” for suspecting that the individual’s known income would not explain the ownership of the property.
In a statement released after the ruling Donald Toon, NCA director for economic crime, said he was pleased that the court dismissed the respondent’s arguments.
“This demonstrates that the NCA is absolutely right to ask probing questions about the funds used to purchase prime property,” said Toon. “We will continue with this case and seek to quickly move others to the High Court."
Transparency International has campaigned for the government to take stronger action against illicit wealth being hidden in the UK, and welcomed the outcome of the hearing.
“We’re delighted that this investigation will continue and unexplained wealth orders are proving to be a valuable tool in the fight against corruption,” said its UK director of policy Duncan Hames. “This decision to hold this hearing in public is a welcome step that should reassure the public that action is being taken against dirty money in our economy.”
Transparency International has previously identified £4.4bn worth of property across the UK that it considers to have been purchased with suspicious wealth.
To date this is the only known case involving UWOs. The respondent has seven days to appeal this ruling.