NCA to appeal ruling discharging unexplained wealth orders

Out-Law News | 15 Apr 2020 | 9:29 am | 2 min. read

The quality of evidence the National Crime Agency (NCA) must present to obtain unexplained wealth orders (UWO) could be clarified by the Court of Appeal in the coming months, an expert in corporate crime law has said.

Olga Tocewicz of Pinsent Masons, the law firm behind Out-Law, was commenting after the NCA confirmed that it will appeal against a recent High Court ruling that served to overturn the grant of three UWOs it had earlier obtained.

UWOs were first introduced in the UK in January 2018, under the 2017 Criminal Finances Act. Once granted by the court, an UWO compels a person to explain the nature and extent of their interest in particular assets worth £50,000 or more; explain how they obtained the assets, especially how they were funded; and to disclose any other information specified in the order.

In May 2019, the NCA had been granted the UWOs in relation to three London properties which are ultimately owned by Dariga Nazarbayeva and Aisultan Nazarbayev, the daughter and grandson of Nursultan Nazarbayev, the former president of Kazakhstan. The NCA had alleged that the properties were acquired "as a means of laundering the proceeds of unlawful conduct" by a now-deceased former Kazakh official, Rakhat Aliyev, who was ex-husband and father respectively to Dariga Nazarbayeva and Aisultan Nazarbayev.

The NCA's UWOs were directed at the registered owners of the three properties, and the agency was initially granted the orders following a so-called 'ex parte' hearing, which is where the court only hears applications presented by one party which the opposing parties are not given notice of.

The registered owners of the properties, together with Dariga Nazarbayeva and Aisultan Nazarbayev, wrote to the NCA in August to challenge the basis of the NCA's application as "factually incorrect". They said the purchases of the three properties were unconnected to Aliyev and his supposed criminal activities and that he was never the ultimate beneficial owner of the properties. They raised judicial review proceedings before the High Court after the NCA refused to withdraw the UWOs.

In considering the case, Mrs Justice Lang took issue with the evidence the NCA had presented in its case. She labelled assumptions the NCA had made as "unreliable" and said they had been "rebutted by the cogent evidence" presented by the registered owners of the properties.

In one example, the judge said: "The use of complex offshore corporate structures or trusts is not, without more, a ground for believing that they have been set up, or are being used, for wrongful purposes, such as money laundering. There are lawful reasons – privacy, security, tax mitigation – why very wealthy people invest their capital in complex offshore corporate structures or trusts. Of course, such structures may also be used to disguise money laundering, but there must be some additional evidential basis for such a belief, going beyond the complex structures used."

Graeme Biggar, director general of the National Economic Crime Centre, which sits within the NCA, said the agency disagrees with the High Court's decision and will file an appeal.

Olga Tocewicz of Pinsent Masons, the law firm behind Out-Law, said: "The UWO regime is a new one and as such, it is not unexpected that the NCA’s powers would be subject to significant legal challenge; this is only the second time such an order has been utilised before the courts in the UK. As the director general of the National Economic Crime Centre noted 'these hearings will establish the case law on which future judgments will be based' and as such it is critical that the NCA meets the evidential thresholds as required if it is to be successful."

"In this case, the High Court was not satisfied that the NCA had proved that the properties subject to the order were bought with illicit funds. The NCA has announced its intention to appeal the decision and as such, we wait to learn more about the court’s expectations when dealing with evidence obtained to support and uphold a UWO, particularly in the current climate where the NCA’s ability to gather evidence through its usual channels may be compromised," she said.