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Unexplained Wealth Orders – Update

Unexplained Wealth Orders (“UWOs”) remain at the forefront of legal agenda following the judgment handed down by Justice Supperstone last week dismissing the application of Zamira Hajiyeva to overturn the UWO applied for by the National Crime Agency (“NCA”).

By way of reminder, a UWO can be obtained if the High Court is satisfied that: 

  1.      the individual holds the property;
     
  2.      the value of the property is greater than £50,000;
     
  3.      there are reasonable grounds for suspecting that the known sources of 
         income (lawfully obtained) are insufficient for the purposes of enabling the
         individual to obtain the property; and
     
  4.      the individual is either a PEP or has been involved in serious crime or a person
         connected with the individual is or has been involved in serious crime.

In February 2018 (in the first case where UWOs were used as a tool to assist the investigations of five UK agencies) the NCA successfully applied for two UWOs requiring Mrs Hajiyeva to explain how she funded the purchase of substantial UK assets following their suspicion that the Properties were purchased (by an offshore BVI company and by Mrs Hajiyeva in her personal capacity) using allegedly stolen funds.

In July 2018 steps were taken to challenge the UWO citing that Mrs Hajiyeva’s husband was not a “Politically Exposed Person” and the order was “disproportionate”. Mr Hajyev was the chairman of the state-controlled International Bank of Azerbaijan from 2001 but is currently serving a sentence in prison for fraud and embezzlement. Justice Supperstone dismissed Mrs Hajiyeva’s challenge in full and ruled in favour of the NCA.

Subject to a further appeal, Mrs Hajiyeva will now be required to produce evidence to account for the purchase of two UK properties worth a total of £22 million from legally obtained income and/or wealth. During this time, the properties remain subject to an interim freezing order essentially restraining Mrs Hajiyeva from disposing of the properties potentially frustrating any future recovery order issued under the civil procedure.

Although the long-term effectiveness of UWOs remains to be tested, this is an interesting development that appears to confirm a robust stance against illicit wealth. We will continue to provide updates on the application and enforcement of UWOs as they arise.

For further information, please do not hesitate to contact Katie Mitchell and 
Robert Macro in our Private Client – International Wealth and Fiduciary Team.