LONDON: The UK government has introduced new rules giving unprecedented powers to law enforcement agencies to crack down on properties and assets amassed through “dirty money”.
Under the new rules, which are designed to stop corrupt people from using Britain as a safe haven, individuals can be fined and jailed if they make misleading statements.
The order that came into force recently allows authorities to freeze and recover property of more than 50,000 pounds if individuals cannot explain why they own assets worth more than their income and show they have acquired them legally.
It is seen as unprecedented as it — like Pakistan’s National Accountability Bureau laws — shifts the burden of proof to the property holder instead of the state.
The new law can also be problematic for some Pakistani politicians as the enforcement authorities don’t need to show that they actually own the property as properties owned by their “associates” can also be subject to the new powers.
Another thing that goes against Pakistani politicians is lower threshold as “a UWO [Unexplained Wealth Order] made in relation to a non-EEA [European Economic Area] PEP [Politically Exposed Person] would not require suspicion of serious criminality”.
List of potential cases, drawn up by Transparency International, includes four Avenfield House flats
Although the British media is looking at the Unexplained Wealth Order (UWO), which came into force on Feb 1, as a weapon to fight corruption by Russian oligarchs having assets in the UK, the new law can have serious implications for Pakistani personalities having properties and assets here.
London-based anti-corruption group Transparency International (TI) says it has identified properties worth 4.4 billion pounds in Britain that should be considered as possible candidates for the new legislation.
It has already prepared a list of five cases which it thinks could be investigated without any delay, including Avenfield House flats case involving former prime minister Nawaz Sharif.
Describing Mr Sharif as the suspected owner of the four Avenfield House flats (16, 16A, 17 and 17A) worth at least eight million pounds, TI noted that the Land Registry documents showed that the four properties were owned by two companies registered in the BVI: Nescoll Limited and Nielsen Limited.
“According to information published as part of Panama Papers, these companies were controlled by the former prime minister of Pakistan, Nawaz Sharif. In 2017, Pakistani authorities initiated an investigation into these assets, which found that they were purchased without a mortgage between 1993 and 1995, just after Sharif reported a growth in wealth without any plausible declared source of income. In July 2017, Sharif was removed from the office after the investigation found that he had failed to disclose these properties on his official asset declaration,” added TI.
The other cases listed by TI include property called Kenwood Gate, Hamstead Lane, London, that is worth 18m pounds and is allegedly owned by the first family of Azerbaijan; and two flats (138A and 138B), 4 Whitehall Court, London, with approximate value of 11.44m pounds and allegedly owned by Igor Shuvalov, the Russian first deputy prime minister.
It should be mentioned here that Mr Sharif is not the only politician to have links to properties in the UK as media reports and court cases have mentioned many other Pakistani politicians with links to controversial properties and assets and those can be targeted by the new powers given to the British authorities.
The Times published a news item in its Saturday edition linking an Indian underworld don to a portfolio of properties in London and its suburbs.
“Documents seen by this newspaper and compiled by the Indian authorities allege that on [Dawood] Ibrahim’s behalf his right hand man, Muhammed Iqbal ‘Mirchi’ Memon, also accrued a vast property portfolio across the Midlands and southeast in the UK as well as India, the United Arab Emirates, Spain, Morocco, Turkey, Cyprus and Australia,” a report published in the daily said.
The newspaper quoted Misha Glenny, who wrote the McMafia book, as saying that Britain features in his [Ibrahim’s] criminal world as a place where he can launder money.
“He is thought to have property interests in a variety of southern English counties like Essex and Kent. But we can’t know for certain because the government has been dragging its heels in legislating to force transparency of the beneficial owners of companies registered in our overseas territories,” she said.
Ibrahim, who has an Interpol red notice, was added to the UK Treasury sanctions list and would be a likely target for an unexplained wealth order in relation to the properties, which include hotels, mansions, tower blocks and houses in suburbs in the southeast.
“The Times matched details from the Indian dossier to records held by Companies House and the Land Registry, as well as the Panama Papers to form a snapshot of the alleged property portfolio,” the report added.
David Green, the outgoing head of the Serious Fraud Office (SFO), one of the government bodies supposed to be using the new powers, called the UWO as an “extremely useful tool”.
Rachel Davies Teka, head of advocacy, Transparency International UK, said the introduction of UWOs would help combat the fight against “dirty money” flowing into Britain.
What is UWO?
According to a circular issued by the Office of Security and Counter-Terrorism, a UWO requires a person who is reasonably suspected of involvement in, or of being connected to a person involved in, serious crime to explain the nature and extent of their interest in a particular property, and to explain how the property was obtained, where there are reasonable grounds to suspect that the respondent’s known lawfully obtained income would be insufficient to allow the respondent to obtain the property.
“A UWO can also be applied to politicians or officials from outside the European Economic Area [EEA], or those associated with them i.e. Politically Exposed Persons [PEPs],” says the circular, adding that “a UWO made in relation to a non-EEA PEP would not require suspicion of serious criminality”.
The ability to apply for a UWO is limited to those agencies defined as an “enforcement authority”, namely, the National Crime Agency (NCA), Her Majesty’s Revenue and Customs (HMRC), the Financial Conduct Authority (FCA), the Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS).
According to the circular, a failure to provide a response to a UWO may give rise to a presumption that the property is recoverable under any subsequent civil recovery action. A person commits an offence if, in purported compliance with a requirement under a UWO, they make a statement that the person knows to be false or misleading in a material way, or recklessly makes a statement that is false or misleading in a material way.
The Unexplained Wealth Order is not seen as part of any kneejerk reaction contemplated by the current government of Theresa May as the relevant government departments were working on it for over two years.
London has long been seen as a favoured destination for corrupt cash and successive governments had been promising action against the use of “dirty money” in the UK property market.
Former British prime minister David Cameron vowed to expose the use of “anonymous shell companies” to buy luxury UK properties, often in London.
“Foreigners must not be able to buy UK homes with ‘plundered or laundered cash’ as part of a global effort to defeat corruption,” he said during a visit to Singapore in 2015.
The PM’s message was: “London is not a place to stash your dodgy cash.”
Published in Dawn, February 4th, 2018