Search

Editors

Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

« Larry Nassar and the Anti-Corruption Olympics | Main | Cobalt says SEC ends second FCPA probe »
Thursday
Feb012018

Martin Kenney: Unexplained Wealth Orders are coming to UK

The Criminal Finances Act (CFA) was enacted in the UK in 2017. On January 31, 2018, the parts of the CFA dealing with Unexplained Wealth Orders (or UWOs) came into force. Transparency International  has taken credit for the introduction of UWOs and has stated that this was in large part as a result of agency’s relentless lobbying.

This development in UK law is an important new tool and is to be applauded. If it operates as it has been drawn up, then the new law could form a meaningful bar to those criminals bringing their Fructus Corruptio (fruits of corruption) to the shores of the UK.

It is likely that the National Crime Agency (NCA) -- the UK’s equivalent of the FBI -- will oversee the administration and execution of the new powers. It will do so in tandem with Her Majesty’s Revenue and Customs, the Financial Conduct Authority, Serious Fraud Office and the Director of Public Prosecutions and the police… which is where the problems will begin. All of these agencies are stretched to their limits, and will claim they are struggling to cope with their current remits.

The police, for example, are simply being overwhelmed with a soaring crime rate (that has seen its biggest jump in a decade), which is almost certainly directly linked to the fall in police numbers (down 20,592 since 2010) brought about by austerity measures. Fraud and cybercrime saw a total of 5.6 million reports last year, with only a fraction receiving any investigative input. 

Sir Tom Winsor, the Chief Inspector of Constabulary for England and Wales, described fraud as being committed in “epidemic proportions,” adding: “The capability at police forces is quite skeletal and that needs to change and change a great deal."

In essence the police have to prioritize their dwindling resources. Given the demise of many Fraud Squads and cuts to Financial Investigation Units, there will not only be a dearth of personnel, but also the requisite expertise. The ability to investigate cases involving unexplained wealth will prove challenging to say the least.

The NCA has escaped many of the personnel cuts. However, they are not held in the highest of esteem by their UK law enforcement counterparts and their record in such matters is patchy at best. Although the CFA is to be welcomed, it is unlikely to have the immediate effect that TI is anticipating, given the scarcity of economic crime/financial investigators with the experience and knowledge to make a difference.

The police resources are now primarily targeted at ‘volume crime’ and "serious crime." The Fraud/Financial Investigation disciplines are simply not policing priorities. The new Act will not see the investigation of foreign corruption ascend to the top of the law enforcement’s to-do list. For this to happen, there will need to be a political sea-change and reconsideration of law enforcement budgets.

Part 5 of the Proceeds of Crime Act 2002 (POCA) had already provided law enforcement access to civil confiscation and forfeiture. Under POCA, the NCA were empowered to target the assets of apparent criminals (the Mr. Bigs) who were too far removed from their criminality to enable the police to secure a criminal conviction. Under POCA, the targets end up being the illicit gains and assets of alleged felons.

The notion was similar to the ambition of UWOs. An allegedly corrupt or dishonest official or person would be put to task in order to explain the origin of their wealth. If you are a drug dealer, then this can prove problematic. This switch in onus and burden of proof onto the suspect, to prove that their wealth was lawfully derived, was anticipated to be the panacea to tackling organized crime. It was designed to strip them of their assets via a civil rather than a criminal process. Unfortunately, this has been used sporadically and ineffectively. I do not anticipate there being much change come April with the enactment of the CFA.

The introduction of UWOs should be celebrated. However, a tinge of realism is required concerning their practical utility in the face of public austerity in law enforcement. Unless the UK is able to take a new box of investigators from the shelf and sprinkle them liberally where needed, then the new Act may struggle to get off the ground due to lack of investigative resources.  

____

Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI and focused on multi-jurisdictional fraud and grand corruption cases www.martinkenney.com |@MKSolicitors. He was selected as one of the Top 40 Thought Leaders of the Legal Profession in 2017 by Who's Who Legal International and as the number one offshore lawyer for asset recovery.

Reader Comments (2)

Most of The Criminal Finances Act 2017came into force last year but the UWOs part came in on Jan 31st 2018 so please see

www.gov.uk/government/publications/circular-0032018-criminal-finances-act-unexplained-wealth-orders/circular-0032018-unexplained-wealth-orders

and correct this article.
February 2, 2018 | Unregistered CommenterJane Jee
Editor's note: Thanks to Jane Jee for her comment. The post has been amended at the author's request.
February 2, 2018 | Registered CommenterRichard L. Cassin
Comments for this entry have been disabled. Additional comments may not be added to this entry at this time.