UWOs and Serious Crime…Not Merely A Threat
In an agreement reached with the NCA at the beginning of October, Mansoor Hussain, a property-developer from Leeds with no previous convictions, handed over 45 properties and other assets worth a combined value of £9,802,828.[1] The agreement comes after the High Court made Mr Hussain the subject of an Unexplained Wealth Order (UWO) in a decision from Murray J in February of this year.[2]
The settlement provides an opportunity to revisit the procedure for making Unexplained Wealth Orders and to reflect upon their use in the recovery of property which is owned by individuals suspected of being involved in serious crime.
Unexplained Wealth Orders
UWOs were introduced under Part 8 of the Proceeds of Crime Act 2002 as investigative tools to assist in building evidence to support a case for the civil recovery of the proceeds of crime under Part 5 of POCA.
In proceedings under Part 5, the High Court may make a recovery order against property if satisfied that the property is “recoverable”. Ordinarily, the enforcement authority bears the burden of proving that property has been obtained through unlawful conduct and is therefore recoverable. The burden raises obvious difficulties in cases where enforcement authorities simply have no information concerning how property was acquired, but the owner of the property appears to be of incongruously limited means.
The Unexplained Wealth Order shifts that burden onto the owner of the property by requiring that the respondent to the order provide a statement explaining how they obtained the property. An application for an UWO may be made by an enforcement authority and must be made to the High Court. The applicant must show both that the property is held by the respondent and is valued at over £50,000. The Court must be satisfied that the respondent’s lawful income would be insufficient to obtain the property.[3] Finally, the respondent must be either a “politically exposed person” or “involved” in serious crime.[4]
If an order is made, failure to comply with its terms means that the property is presumed to be “recoverable” for the purposes of civil recovery proceedings.[5] That presumption is a rebuttable one and may be challenged in contested recovery proceedings. How the presumption would be challenged in civil recovery proceedings remains to be tested.
The Hussain Settlement
The settlement reached with Mansoor Hussain is significant. It is the first time an unexplained wealth order has been used, successfully, to recover property. It will provide a much-needed boost to the confidence of the NCA. In April, the High Court discharged unexplained wealth orders in respect of three London properties on the basis that the NCA had made the orders on a “flawed” basis.[6]
The settlement is also the first example of a UWO being used to recover the property of an individual suspected of being involved in serious organised crime. The NCA has only applied for UWOs on four occasions. Two of those applications were against “politically exposed persons”[7] and the third remains at a very early stage.[8]
By section 362B(4) the High Court may make an UWO where there are reasonable grounds for suspecting that the respondent “is or has been involved in serious crime” or “a person connected with the respondent is or has been, so involved” (the “serious crime” requirement).
In Hussain, the High Court considered the application of these provisions for the first time. Before assessing how the Court made their decision, a little background on Mr Hussain and how he aroused the suspicion of the NCA is necessary.
Mr Hussain has no previous convictions. According to the NCA, he is the director of a number of companies purportedly engaged in property development and management. The NCA’s application concerned eight properties in London, Cheshire and Leeds. Those properties were owned by Mr Hussain, in most cases through companies of which he was the sole director.
The value of Mr Hussain’s property portfolio was nearly £10 million. However, between 2003 and 2017, Mr Hussain’s net annual income was less than £10,000 and the companies through which Mr Hussain owned the properties appeared to have neither assets nor cash.[9] It is small wonder that Mr Hussain came to the attention of the NCA.
In relation to the serious crime requirement, the NCA described Mr Hussain as a designated “cleanskin” and a “professional enabler” – a person with no serious criminal convictions, who enables those operating in criminal activities by providing money laundering services.
Under the statute, a person is “involved in serious crime” for the purposes of a UWO if the person would be so involved under the provisions of Part 1 of the Serious Crime Act.[10] Under the Serious Crime Act, a person is “involved in serious crime” if they have committed a serious offence, facilitated the commission by another of a serious offence or conducted themselves in a way that was likely to facilitate the commission by themselves or another person of a serious offence.[11] A “serious offence” is defined by the statute and includes offences of money laundering and drug trafficking.[12]
The Court in Hussain made clear that “involvement” in serious crime does not require that the respondent has “committed” a serious offence. It is enough for the respondent to have conducted themselves in a way that was likely to facilitate the commission of a serious offence. It was on this basis that the NCA made their application against Mr Hussain.
Mr Justice Murray recognised that there is no reported decision on the meaning of the word “facilitate” under the SCA 2007. The Court therefore adopted the interpretation of “facilitate” made in K [2018] EWCA Crim 1432 under the s4(1A) of the Asylum and Immigration Act 2004:
“facilitating is intended to be different from ‘arranging’ and would include ‘making easier’. It is not sensible to lay down precise definitions of these terms”.[13]
The NCA alleged that Mr Hussain had extensive links with individuals known to be involved in serious criminality. This included Mohammed Nisar Khan who is currently serving a life sentence for murder and whom the NCA believe is the head of an organised crime gang operating in Bradford. The NCA maintained that Mr Hussain paid Mohammed Nisar Khan’s son’s private school fees and funded a confiscation order made against his brother, Shamsher Khan.
Murray J concluded that Mr Hussain had conducted himself in a way that was likely to facilitate the commission of money laundering offences as well as the offences underlying the money laundering offences. The “serious crime” requirement was therefore amply satisfied.
The Court concluded that it was just, appropriate and proportionate to make the UWO. Mr Hussain was plainly unable to respond to the terms of the UWO and, rather than contest civil recovery proceedings, he decided to settle matters out of Court.
Commentary
It is perhaps unsurprising that Mr Hussain chose to settle these proceedings. It is an offence under the legislation to provide a statement which the respondent knows to be false or misleading when responding to the terms of an UWO.[14] What is surprising is the number of properties Mr Hussain handed over under the settlement agreement. The original UWO was made against 8 properties, but Mr Hussain handed over 45. Mr Hussain was unrepresented in the High Court proceedings and if he did not receive legal advice prior to reaching the settlement agreement the case may provide a salutary lesson to unrepresented parties in complex civil recovery proceedings.
The agreement marks the resolution of the NCA’s first successful use of UWOs to tackle property obtained through serious organised crime. In that respect it is a milestone and sends a strong message that UWOs are not merely a threat but are an important and effective tool in recovering the proceeds of organised criminality.
Brendan Kelly QC & Redmond Traynor
[2] National Crime Agency v Hussain [2020] EWHC (Admin); [2020] 1 W.L.R 2145; [2020] 2 WLUK 380 (QBD) Admin
[3] Section 362B(3) POCA 2002.
[4] Section 362B(4) POCA 2002.
[5] Section 362C(1) and (2) POCA 2002.
[6] R v Baker and others [2020] EWHC 822 (Admin)
[7] R v Baker and others [2020] EWHC 822 (Admin) and NCA v Hajiyeva [2020] EWCA Civ 108.
[8] https://www.nationalcrimeagency.gov.uk/news/nca-secures-unexplained-wealth-order-against-properties-owned-by-a-northern-irish-woman
[9] With the exception of one year in which his income was £30,280.
[10] Section 362B(9)(a) POCA 2002.
[11] Section 2(1) Serious Crime Act 2007.
[12] Section 2(2) of the Serious Crime Act 2007.
[13]Hussain at 55.
[14] Section 362E POCA 2002.
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