A partner at Charles Anthony LLP, an international law, business crime and asset recovery firm in Lagos, Jonathan Akinsanya, practices as a senior criminal defence barrister in London. He has over 20 years experience at the England & Wales’ Bar. In this article, he writes that following recent changes to United Kingdom’s law, Nigerians risk losing their assets.
Last year, the Federal Republic of Nigeria implemented an opportunity for all tax payers to regularise their tax status. The concern was that Nigeria’s low tax revenues are at variance with the lifestyle of a large number of its people and their worldwide assets. In light of these factors Nigeria signed up for the establishment of the Beneficial Ownership Register at the Anti-Corruption Summit in London in 2016.
On the 3rd February 2018 the Minister of Finance of the Federal Republic of Nigeria, Hon. Mrs Kemi Adeosun advised Nigerians with property in the United Kingdom (UK) to take advantage of Nigeria’s Voluntary Assets and Income Declaration Scheme (VAIDS) in order to escape ‘the hammer of the UK’s new Unexplained Wealth Orders’.
Proceeds of crime have been a problematic issue all over the world for many years. The UK has been at the forefront of establishing legal frameworks in an attempt to deal with it. However, despite the UK government’s attempts to plug the holes, it was considered that critical gaps remained in the legal framework that enabled those, be it individuals or companies, with corrupt intent were taking advantage. A taskforce of professionals in the area of asset recovery identified that the current asset recovery regime has a number of deficiencies, namely:
‘The levels of asset recovery are relatively low.
The law enforcement agencies are given Inadequate time to investigate suspicious transactions – currently the investigators have 31 days to investigate and build sufficient evidence to act on suspicious transactions
Law enforcement agencies are under resourced.
The current legal framework for asset recovery is reliant on a conviction in the origin country’
In order to remedy the aforementioned gaps in the legislation the UK Government has relatively recently introduced Unexplained Wealth Orders (UWO).
So what is a UWO?
It is a measure inserted into the Proceeds of Crime Act 2002 (hereinafter “POCA”) by Part 1 of the Criminal Finances Act 2017. The new section 362A POCA now gives any law enforcement agency the power to make an application to a High Court judge for a UWO and such an application may be made Ex-parte, i.e. without notice. Any application made under this provision must contain various details including naming the relevant property and who is said to own it.
Before a High Court judge makes a UWO he must be satisfied that there is reasonable cause to believe that the respondent in the said case holds the property, and that the value of the property is greater than £50,000.
In addition, a High Court judge must be satisfied that there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling him to obtain the property with is the subject of the UWO.
The Act sets out what criteria can constitute “reasonable grounds” for the High Court and this includes “known sources of the respondent’s income are the sources of income that are reasonably ascertainable from information at the time of the making of the application for the order”. Income is lawfully obtained if it is obtained lawfully under the laws of the country from where the income arises”.
The specified person (hereinafter “the respondent”) must be a politically exposed person, or there are reasonable grounds for suspecting that the respondent is, or has been, involved in serious crime (whether in the UK or elsewhere) or a person connected with the respondent is, or has been so involved. The Act defines a politically exposed person. What is this definition?
What is the Practical effect of a UWO?
The practical effect of a UWO is that, once the order is made the respondent is required to provide to the court an explanation of how he/she obtained the property which is the subject of the UWO.
What is the Effect of
non-compliance with UWO
If the respondent fails to comply with the requirements of the UWO without reasonable excuse before the end of the response period set by the court, the presumption is that the property is recoverable (forfeited) for the purposes of any proceedings taken in respect of the property unless the contrary is shown – the presumption only applies in relation to the property:
Relating to the respondent’s interest in the property, and
Only if the value of that interest is greater than £50,000
Does the UWO carry
criminal liability?
The Unexplained Wealth Order has no criminal liability attached to it, save where there are false or misleading statements made in the purported compliance with a requirement imposed by the UWO.
It is an entirely civil measure which allows the law enforcement agencies to recover and/or restrain (forfeit) the property without resorting to criminal procedures and/or sanctions. Its use is limited to perceived illicit assets owned by government officials (including family members or close associates) or those with links to serious crime –serious crime includes money laundering, bribery and corruption, fraudulent evasion of income tax. Another important feature is that it shifts the burden of proof onto the respondent to demonstrate the legitimacy of the funds used to acquire the property, the subject matter of the UWO.
It is clear that we have entered a new dawn in Nigeria – the Federal Ministry of Finance is gathering information on individuals (and companies) through international asset tracing professionals and where there is evidence of politically exposed persons or a Nigerian is involved in serious crime e.g. tax evasion, money laundering who have acquired property in the UK then a complaint can be made to a law enforcement agency in the UK who will proceed to apply for a UWO from the High Court. The days of being able to hide assets in the UK appear to be over!
