Policy background Unexplained Wealth Orders
The UK has one of the world’s largest and most open economies, and London is one of the world’s most attractive destinations for overseas investors. These factors make the UK attractive for legitimate business, but also expose the UK to money laundering risks from Politically Exposed Persons (PEPs) (as defined in section 362B and 396B of the Proceeds of Crime Act 2002). As noted in the joint Home Office and HM Treasury National Risk Assessment of money laundering and terrorist financing 2020, property in the UK is attractive to both foreign and domestic criminals seeking to conceal large amounts of illicit funds, disguise their ownership, and realise the proceeds of their criminal activities.
	The UK is internationally recognised as having some of the strongest controls worldwide when it comes to tackling money laundering and bringing to justice those who seek to use or hide the proceeds of crime. To continue to deliver the Government’s economic crime agenda and target more kleptocrats and corrupt elites, enforcement agencies must be equipped with the appropriate powers to investigate.
	An Unexplained Wealth Order (UWO) requires a person who is a PEP or reasonably suspected of involvement in, or of being connected to a person involved in, serious crime to explain the origin of assets (minimum combined value of £50,000) that appear to be disproportionate to their known lawfully obtained income.
	A UWO is not (by itself) a power to recover assets. However, any response from a UWO can be used in subsequent civil recovery proceedings.
	Legislative reform is required to strengthen and reinforce the UWO regime to ensure the powers can be used to maximum effect, particularly to ensure property held via complex ownership structures and trusts is within the scope of the regime. The reforms are also intended to mitigate the significant operational risks to an enforcement authority.
	The desired outcome of these amendments is to strengthen the UWO regime to enable law enforcement to take more effective action against kleptocrats and serious and organised criminals who launder their funds in the UK. In turn, this will lead to greater prospects of the recovery of assets bought with the proceeds of serious and organised crime, particularly corruption.
	The UWO amendments have four primary objectives and are intended to both extend and clarify the scope of the powers by:
Countering the inability or unwillingness of kleptocratic foreign states to provide reliable support to enforcement authorities investigations.
Better enabling enforcement authorities to meet the evidential standard at the outset of the investigation, thereby allowing powers to be used to maximum effect in the broadest range of suitable cases.
Allowing a fuller investigation to take place by extending the maximum time a court can allow property to be frozen in relation to a UWO.
Removing a barrier to the use of UWOs, enabling legal costs to be limited for enforcement authorities unless they have used the powers unreasonably, improperly or dishonestly, increasing risk appetite and operational confidence.