The Criminal Finances Act 2017:
What do you need to know?
UNEXPLAINED WEALTH ORDERS
Do you hold property in the UK valued above £50,000?
If so, you may be subject to an unexplained wealth order (UWO).
What is a UWO?
A UWO is a court order that requires you to prove that your property was obtained legitimately, by setting out the nature and extent of your interest in the property and explaining how the property was obtained. A UWO may also require you to produce particular documents to a law enforcement authority in support of your explanation. Failing to provide an adequate response to a UWO within a prescribed response period, may result in the court finding that your property was obtained by unlawful conduct and therefore subject to recovery.
Requirements for making a UWO
A UWO will be granted where the court is satisfied that there is reasonable cause to believe:
1. You are the holder of the property (even if you are outside the UK);
2. The value of the property is greater than £50,000; and
3. There are reasonable grounds to suspect that you had insufficient “lawfully obtained income” to obtain the property.
Income is “lawfully obtained” if it is obtained lawfully under the laws of the country from where the income arises.
Additionally, in order to grant a UWO the court must be satisfied that you are either a Politically Exposed Person (PEP) or, that there are reasonable grounds to suspect that you (or a person connected to you) is or has been involved in a serious crime in the UK or overseas.
A PEP is a person who is or has been entrusted with prominent public functions by an international organisation or by a State other than the UK or another EEA State. A PEP can also be a family member, known close associate of, or otherwise connected to such person. Infinity Advisory & Management 2nd Floor, Berkeley Square House, Berkeley Square, W1J 6BD Mob: + 44 7720 784 035 • Website: infinityadvisoryandmanagement.co.uk
Effect of the UWO
At the time of making the application for a UWO, the law enforcement authority can seek an interim freezing order against your property, if there is a risk that the property would be dissipated before a potential recovery is made.
If an interim freezing order is granted, and you fail to respond to the UWO within the response period, the authority can apply for a restraint order, property freezing order or interim receiving order over the property within 48 hours after expiration of the response period. In the event that you do comply with the UWO, the authority will have 60 days to decide what action it seeks over the property (if any), including recovery of the property.
It is a criminal offence (punishable by maximum two years’ imprisonment and/or fine) if a response to a UWU contains a statement that you know to be false or misleading or if you recklessly make a statement that is false or misleading.
SUSPICIOUS ACTIVITY REPORTS
Extension of moratorium period
Under the new legislation, law enforcement agencies can seek an extension of the moratorium period associated with a filed Suspicious Activity Report (SAR). The extension can be made in order to enable law enforcement agencies to conclude their investigations in relation to information contained in the SAR.
When will the extension be granted?
An extension for a period of up to 31 days (up to a total of an additional 186 days) can be granted if the court is satisfied that:
1. An investigation is being carried out in relation to a relevant disclosure;
2. The investigation is being conducted diligently and expeditiously;
3. Further time is needed for conducting the investigation; and
4. It is reasonable in the circumstances for the moratorium period to be extended.
INFORMATION AND DISCLOSURE ORDERS
An enforcement authority can now apply to the court to withhold specified information from being made available to you if you are the subject of a SAR. In order to withhold such information from you the court must be satisfied that, inter alia, evidence of an offence would be interfered with and that recovery of the property would be hindered.
Following submission of an SAR, the Act also allows a law enforcement agency to apply to the court for a further information order against you for the production of evidence used for the investigation, only where certain conditions are met.
You may also be required to provide any relevant information or documents you have in relation to an investigation into money laundering or terrorist financing, pursuant to a disclosure order made by the court.
Requirements for disclosure order
A disclosure order will be granted if the court is satisfied that:
1. There are reasonable grounds for suspecting that the person specified in the application had committed a money laundering offence;
2. That the information provided is likely to be of substantial value to the investigation;
3. It is in the public interest for the information to be provided.
Effect of the disclosure order
Failure to comply with a disclosure order is a criminal offence punishable to imprisonment of a term no longer than six months and/or a fine. However, if you provide false or misleading statement in relation to the order the term of imprisonment can increase to two years.
RECOVERY OF LISTED ASSETS AND CASH
The Act expands the search and confiscation powers in relation to cash and personal movable property on your premises. You may be required to forfeit a seizable listed asset (including precious metals, stones, watches and artistic works) if the asset was intended by you for the use in unlawful conduct and has a minimum value of £1,000.
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