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Suspicious people: arrests of oligarchs began in the UK

Britain began to arrest property of unknown origin in the fight against criminal proceeds. Due to the new law, there is no need to bring charges of corruption or other crimes to conduct a check on "politically significant persons"

28 February, the British National Crime Agency (NCA) announced the receipt of two unexplained wealth orders (UWOs), obliging an unnamed owner of luxury English real estate with a total value of 22 million pounds to disclose sources of funds for its acquisition. At the same time, the NCA in the same court received interim freezing orders (IFOs), which prohibit the alienation of the property by the suspect until the investigation is completed.

The NCA press release does not mention the nationality of the person involved in the investigation, but according to the British press, it is a political figure of one of the countries of Central Asia.

The new law unleashes law-enforcement officials hands

In January 2018, British law enforcement officers were given an opportunity through the court to oblige the property owner to disclose sources of funds for his purchase, if the official income of the buyer clearly does not match the value of the property.

And we can talk not only about real estate, but also, for example, about securities or any other asset worth more than 50 000 pounds. This became possible with the entry into force of the law "On Criminal Finance 2017 Year" (Criminal Finances Act 2017), adopted last year.

Moreover, in order to obtain a sanction for an investigation into foreign "politically exposed persons" (PEPs), the court only needs to be satisfied that there are "reasonable grounds to suspect" that the known sources of income of the potential investigator are not sufficient to acquire the property with which such person owns (with respect to persons who are not PEP, there is also a second criterion - the existence of "reasonable grounds to suspect" that a potential person or persons connected with him are implicated in the commission of an offense, For a serious crime in the UK or abroad).

Thus, to conduct an audit of persons classified as PEP, there is no need for any charges of corruption or other crimes or evidence of any unlawful actions. Do not even need a suspicion of criminal activity. It turns out that British law enforcers are free to ask the court for permission to conduct inspections against PEP.

And who are these PEP?

The definition of PEP is the same for all EU countries - it is set in the "anti-laundering" directive 2015 / 849 from 20 May 2015 year. It deals with foreigners from outside the EU, who have certain powers in their country, as well as their relatives and friends. The UK is likely to continue to use the European definition of PEP after its withdrawal from the EU. It is expected that, within Brexit, most of the European norms will simply be transferred to domestic legislation, so that at the time of exit there are no "holes" due to the fact that European norms will cease to function at once.

There are special PEP databases, but the fact of inclusion or non-inclusion in such a database is not decisive - a court can recognize or not recognize a PEP person regardless of the database compiler.

From Russia with cash

As it is easy to guess, a new law has appeared not from scratch. The political agenda in the UK is now quite contradictory. On the one hand, London must remain the world financial center, despite Brexit. Entire sectors of the economy depend on the influx of foreign money: construction, financial and legal services, private medicine and education ... The list can go on for a long time. On the other hand, surveys of London residents show a high level of discontent with rising house prices.

Over the past decades, London has earned the glory of the world capital for wealthy people. Have a mansion or at least an apartment in London has become a matter of honor, not only for regulars on the Forbes list, but also for figures of lower rank. I must say that English legislation, unlike the Russian one, imposes obligations on combating money laundering not only on banks, but also on representatives of the sphere of professional services: realtors, lawyers and accountants. All of them must identify their client (KYC rule - know your client) and the counterparty and make sure, as far as possible, in the legality of the source of funds.

In 2015, Channel 4 journalists, armed with a hidden camera, tried to "buy" real estate in one of the most prestigious areas of London. On a direct hint to the realtor that the "client" is a major official of one of the countries of the former USSR with a small official salary and would not want to expand on the sources of his well-being, he only grinned and promised to arrange everything "at its best." The resulting documentary "From Russia with Cash" caused a great scandal, shown in the movie realtor denied a license.

However, the problem did not resolve this. At the end of last year, the Solicitors Regulation Authority conducted a selective audit in several dozen law firms and found that in many cases the procedures for monitoring the sources of customer funds were inadequate.

Abolition of the presumption of innocence

It may seem that the new law essentially abolishes the presumption of innocence and gives the state the right on the basis of suspicion only, and not evidence to violate the inviolability of private life. Is such an intervention justified? The search for a balance between personal and public interests in the context of combating crime is relevant not only in the UK. For many years, the debate on the legality of the stop & frisk tactics used by the police in troubled areas has been continuing in the US for many years (a quick search of suspicious-looking individuals right on the street in order to detect illegally worn weapons and illicit drugs). Supporters believe that such a right allows the police to deal more effectively with street crime. Opponents, on the contrary, believe that such a technique is a manifestation of racism, since under the suspicion of the police, almost exclusively young African-American men fall.

One can trace a direct analogy with the new British law: if a person is PEP, then he is obviously a suspicious subject, which means that his rights can be limited in the interests of combating the laundering of criminal proceeds.

Whether this approach will justify itself and whether it will help to combat corruption and laundering of criminal incomes, time will tell. In the meantime, you can only recommend those who have already bought or are thinking about buying real estate or other assets in the UK - and at the same time is or has a chance (due to past or current work) to be classified as PEP - to attend to confirmation of legal sources of funds for purchase, Not waiting until such confirmation is required by the English court.

A source: Forbes

Author: Ivan Tertychny

Tags: United Kingdom, Economy, Corruption, Europe