Court of Appeal upholds NCA’s use of unexplained wealth orders

The Court of Appeal in London has backed the UK National Crime Agency’s (NCA) use of unexplained wealth orders (UWOs), dismissing an appeal brought by the subject of the first UWO granted.

The decision will encourage the NCA to push forward with its use of UWO applications in the future, said corporate crime expert Fiona Cameron of Pinsent Masons, the law firm behind Out-Law.

The court dismissed an appeal brought by Zamira Hajiyeva, the wife of an Azerbaijani banker, who was seeking to discharge an UWO obtained by the NCA in terms of which Ms Hajiyeva was required to disclose certain information in relation to the property, including the source of the funds used to purchase that property, or risk its seizure. Hajiyeva claimed to be the beneficial owner of the property, but the British Virgin Islands Financial Investigation Agency informed the NCA that the beneficial owner was in fact Hajiyeva’s husband Jahangir Hajiyev, who is imprisoned in Azerbaijan for fraud and embezzlement.

The appeal was brought on five grounds and the judgment gives useful guidance on the scope of the statutory powers underlying UWOs.

“The NCA’s application for the UWO in this case was its first use of the power since its introduction in the Criminal Finances Act 2017," said Cameron. "With their introduction hailed as significant breakthrough in the UK’s fight against corruption, and its determination to discourage the flow of illicit finances through its centres, the Court of Appeal’s decision has been awaited with interest.”

“That decision will no doubt have come as a relief to the NCA as it confirms the efficacy of the tool in its arsenal against corruption – a contrary decision would have been a bitter blow,” Cameron said.  

The Court of Appeal decided that the lower courts had correctly determined that Jahangir Hajiyev, formerly chair of the International Bank of Azerbaijan, was a “politically exposed person” and that, as a family member, his wife was therefore also politically exposed.

To make an UWO, the court must be satisfied that there are reasonable grounds for suspecting that the known sources of the lawfully obtained income available to the politically exposed person would have been insufficient to enable him or her to obtain the property. Hajiyeva had sought to argue that her husband's conviction for fraud and embezzlement should not be taken into account at this stage. Whilst the court accepted that in some circumstances a foreign conviction would not form grounds for  such a reasonable suspicion, or that a person was involved in serious crime as set out in the Proceeds of Crime Act, this was only one strand in the current case, and other factors meant that the NCA had reasonable grounds for suspecting that Jahangir Hajiyev’s legitimate income as a state employee would have been insufficient to generate the funds used to purchase the London property.

The Court of Appeal also dismissed Hajiyeva’s arguments that the UWO failed to protect her privilege against both self-incrimination and spousal incrimination in Azerbaijan.

Cameron said: “The result will undoubtedly encourage the NCA to push forward with more such applications in the future. Ms Hajiyeva will now have to explain how she could afford the properties, failing which they will be liable to seizure by the NCA”

Hajiyeva will also have to pay the NCA’s costs.

UWOs were first introduced in the UK in January 2018, under the 2017 Criminal Finances Act, and the UWO against Hajiyeva was the first to be granted.

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. Failure to comply with a UWO creates a presumption that the assets have been obtained through unlawful conduct, and they are therefore vulnerable to civil recovery proceedings.