UK ‘McMafia’ UWO law fails to root out ill-gotten gains

The popular TV series ‘McMafia’ – a crime drama starring James Norton who plays a British-raised son of a Russian mafia boss trying to escape his past in London – which was being aired at the same time the Unexplained Wealth Order powers were introduced, led to the law being dubbed the ‘McMafia’ law.

Unexplained Wealth Orders –

1. In 2018, the UK passed a law that gave authorities a new tool to help sniff out illicit wealth, known as Unexplained Wealth Orders, or UWOs.
2. A legal tool designed to sniff out illicit wealth was meant to help rid the City of dirty money. But it hasn’t entirely delivered the results the government might have hoped for, Ben Lucas reports
3. But five years later, the UK’s crime-fighting authorities have barely used the tool.

Court battles

1. UWOs became available to the authorities in early 2018. They force individuals to explain how they acquired their UK-based assets worth more than £50,000.

Zamira Hajiyeva

2. The National Crime Agency (NCA) first deployed the tool that same year against Zamira Hajiyeva, the wife of a former boss of the Azerbaijani state bank, who was jailed for defrauding the bank out of millions of pounds.
3. Unexplained Wealth Order recipient Zamira Hajiyeva arrives for her extradition hearing at Westminster Magistrates’ Court.
4. The case targeted Hajiyeva‘s property, including her Knightsbridge home and an £11m Berkshire golf course. It also revealed her excessive spending habits, showing she had spent over £16m at Harrods between 2006 and 2016.
5. She has consistently denied any wrongdoing.
6. The NCA was successful, and despite appeals by Hajiyeva, the courts consistently sided with the agency.
7. But after this win, the authorities lost momentum.

Former president of Kazakhstan, Nursultan Nazarbayev

8. The next case targeted assets linked to family members of the former president of Kazakhstan, Nursultan Nazarbayev, ordering them to explain how they purchased several multi-million-pound properties.
9. The NCA targeted three properties worth a total of £80m that it suspected were purchased with ill-gotten gains, including a mansion on London’s famous Billionaire’s Row, a Chelsea apartment and another house in Highgate.
10. But the court rejected the NCA’s claims and hit the agency with a £1.5m legal bill.

Experts

1. Experts argue this was a turning point, and since this case, the authorities’ appetite for using them has all but disappeared.
2. A spokesperson for the NCA confirmed to City A.M. that UWOs have only been deployed in five cases since they were introduced, including the one where it was ultimately unsuccessful.
3. Meanwhile, a spokesperson for the Serious Fraud Office (SFO) confirmed that it has never applied for such an order, although it still deemed UWOs a “powerful tool”.
4. This is a far cry from what the government envisioned. A 2017 Home Office impact assessment predicted authorities would deploy as many as 20 UWO applications per year.

Expectation vs reality

1. While all new legislation needs testing, and one would expect to see appeals and robust legal challenges, experts say that UWO’s power was over-hyped at the time.
2. one former NCA employee told City A.M.
1. “There have always been significant public misconceptions around UWOs themselves being a ‘result’ rather than the early investigative tool it is in reality,”

2. “Bringing a successful legal action against the well-connected, litigious, wealthy criminals and corrupt [Politically Exposed Persons], where all previous attempts have failed, was always going to be a tall order,” they added.

3. “The take up hasn’t been near what one might have expected.”

3. Pia Mithani, a partner at the law firm Stewarts, said:-

1. Despite the fanfare when first introduced, “the take up hasn’t been anywhere near what one might have expected.”
2. UWOs themselves are adequate tools. “I think describing the powers as weak on paper would be wrong. The threshold requirements to obtain a UWO are not in themselves particularly onerous,”
3. “The problem comes when the evidence to support an application is put under the microscope and challenged by well-resourced respondents who want to challenge and set them aside.”

6. Lawyers say the risk of landing with a hefty legal bill, as the NCA did in the Aliyev case, was one of the main reasons the authorities became hesitant.
7. Ben Cowdock, a senior investigator at Transparency International UK, told City A.M:-
1. “Have UWOs been effective against high-level targets? No, they haven’t,”.
2. “If [they] were deployed against people that weren’t as politically powerful, they could be more useful.”
8. A spokesperson for the NCA told City A.M. that:-
1. UWOs are “only one of a range of tools available to the agency, and they have a particular use.”

2. “We have always been cautious about how many cases we would use UWOs.
3. A small number a year. They are not a simple solution, involving no small amount of investigation and work to apply for,”
7. To breathe life into UWOs, the government changed the law in 2022 so authorities won’t have to pay legal costs if they are unsuccessful unless they were found to have acted unreasonably or dishonestly.
8. Cowdock said.
1. “Now that there’s cost capping, I think it’s worth waiting a little bit longer to sort of see if they are used anymore before we write them off,”
2. “But I also don’t think we should see them as a silver bullet.”

A ‘damp squib’

1. Some, however, argue that the tool remains unpopular with law enforcement even with the cost capping in place.
2. Susan Hawley, the director of the campaign group Spotlight on Corruption, told City A.M. that:-
1. Law enforcement agencies “don’t particularly like this tool”.
2. “Law enforcement described them as a goldilocks power – they only work under quite narrow and specific conditions.”
3. Susan Hawley, the director of the campaign group Spotlight on Corruption
1. “They have been described by law enforcement as a goldilocks power – they only work under quite narrow and specific conditions,” she said.
4. Jonathan Grimes, a partner at the law firm Kingsley Napley, said:-
1. That UWOs are just “quite hard work”.
2. “At the end of the day, law enforcement has kind of concluded there’s not a whole load that they can get from a UWO that they can’t get from some other means,”
5. Even though authorities would not necessarily have to pay legal costs in case of a court loss, they still must pay to instruct barristers in the high court.
6. And it still takes time to get results. A spokesperson for the NCA confirmed it is still trying to confiscate the assets in the Hajiyeva case.
7. Josef Rybacki, an associate at law firm WilmerHale, told City A.M. that.
1. They’ve ultimately been a “damp squib” and are “not favoured by law enforcement agencies”.
8. But all hope is still possible. The former NCA employee said.
1. “Sometimes, new policing tools work well. The Account Forfeiture Orders, for example, have proven to be widely applicable, producing consistently strong results since their inception.”
9. As for UWOs, though, this tool will be left near the bottom of the toolkit when fighting financial crime.

Source

• https://www.cityam.com/why-the-mcmafia-law-failed-to-root-out-kleptocrats-ill-gotten-gains/