On 8 April 2020 The High Court dismissed the Unexplained Wealth Order (UWO) obtained by the National Crime Agency (NCA) over three London properties, which have a combined worth of more than £80m.
This is a significant blow to the NCA and raises questions of the future effectiveness of UWOs.
One of the three properties that was subject to a freezing order under the UWO, on what is known as "Billionaire's Row" in Hampstead, is known to be the family home of Nurali Aliyev – a member of Kazhakstan's political elite. Nurali is the son of Rakhat Aliyev a notorious former senior official in the Kazakhstani government, who died in an Austrian prison in 2015. The other two properties are situated in Highgate and Chelsea. Each of the three properties is owned by nominee companies incorporated in Panama, Anguilla and Curacao – three tax havens.
The NCA believes the mansions were acquired by Rakhat Aliyev and have reasonable grounds to suspect that he and others connected to him to have been involved in serious crime, "including bribery, corruption, blackmail, fraud, forgery and money laundering.”
What is an UWO?
Unexplained Wealth Orders is a tool used by the UK to fight against suspected criminal money invested in property. They are used to compel owners of property to reveal the source of their wealth where the known, legitimate funds of the owner seem insufficient to fund the purchase.
The owner must be either (a) a politically exposed person (PEP) or (b) someone suspected of a serious crime anywhere in the world (or those connected to them).
What are the consequences?
An interim freezing order is placed over any suspected property, preventing them from being sold or otherwise dealt with.
The nominee companies succeeded in their application to have the UWO's quashed. Justice Lang was not satisfied that the NCA had proved that the three properties were purchased with illicit money. She found the NCA's assumption that Rakhat Aliyev was the ultimate beneficial owner (when he was alive) of the Hampstead property on Billionaire's Row to be "unreliable". The freezing order of the three properties has therefore been discharged.
As relatively new measures, this was only the UK's second use of an UWO. Last month, the Court of Appeal (CoA) upheld the UK's first UWO. Mrs Zamira Hajiyeva, wife of an Azerbaijani state banker jailed for fraud, was ordered to explain how she could afford a mansion near Harrods, £16m worth of shopping in the luxury department store and a golf course in Berkshire. The CoA denied permission to appeal to the Supreme Court and an order was made for the NCA's legal costs to be paid.
The High Court's dismissal of the UWO in this instance arguably undermines the NCA's (and therefore the UK's) ability to root out dirty money and reveal the identities behind off-shore corporate entities that hold UK property.
Whilst it is a setback, the NCA has said that it expected challenges to the use of UWOs, given that they are such new measures. It will be interesting to see whether the NCA's appeal is successful and what guidance the CoA provides on their use.