The UK has many law enforcement agencies employed to investigate and prosecute individuals and organisations engaged in investment fraud, money laundering or other financial crimes.
Once the perpetrators of financial crime have been brought to justice and a conviction secured, what remedial options are then available to Enforcement Authorities* to recover the proceeds of crime.
At present, the two key pieces of legislation or statutory powers available to UK enforcement agencies are found under the Proceeds of Crime Act (POCA) and the Criminal Finances Act.
Criminal Finances Act
The Criminal Finances Act (CFA) was enacted by Parliament in 2017 and provides UK law enforcement agencies with a range of new statutory powers.
These include the ability to issue Unexplained Wealth Orders (UWO) or Asset Freezing Orders (AFO).
It also introduced new offences including making the facilitation of tax evasion a corporate criminal offence.
Unexplained Wealth Orders
Unexplained Wealth Orders (UWO) came into effect on 31st January 2018.
They are investigation orders issued by the High Court if requested to do so by a recognised Enforcement Authority* such as the National Crime Agency or the Financial Conduct Authority.
The UWO can be issued once a number of conditions have been satisfied. For example, where an individual is suspected of being involved in serious crime or connected to someone who is, then that person will be required to explain the nature and extent of their interest in specified assets.
The UWO would apply in particular to individuals where it is known that the person’s declared income is insufficient to explain how the assets were obtained. Once a UWO is issued, the respondent must provide evidence of lawful ownership of the assets and the means used to acquire them.
Failure to respond to a UWO may lead to the presumption that these assets could eventually be recoverable under the POCA. Also, where the respondent knowingly issues a false or misleading statement, then a fine and/or imprisonment up to two years can be imposed.
It should be noted that a UWO is a civil power and evidence obtained under it cannot normally be used in any subsequent criminal prosecution. However, it can be used a part of any civil recovery proceedings under POCA.
The court can also issue an interim freezing order relating to all property held pending the outcome of a civil recovery investigation, to show that on the balance of probability the assets have come from criminal activity.
Asset Freezing Orders
One of the key provisions in the CFA is the forfeiture of money held in bank and building society accounts (“recoverable property”). This new provision should make it easier for enforcement agencies to freeze and confiscate monies or funds which have allegedly been obtained through criminal activity.
A magistrate’s court can issue an Asset Freezing Order (AFO) which allows credit balance held in a UK bank account to be frozen for up to two years. If the court is satisfied that the funds were obtained through unlawful activity or were intended for use in some unlawful activity then an Asset Forfeiture Order can be issued.
In effect, these orders can used by law enforcement agencies to forfeit substantial amounts of money without having to prosecute anyone and prove their guilt.
Proceeds of Crime Act
To learn about the Proceeds of Crime Act please click here.
*Full list of UK Enforcement Authorities
- the National Crime Agency
- HM Revenue and Customs
- the Financial Conduct Authority
- the Serious Fraud Office
- the Crown Prosecution Service
