UK National Crime Agency (NCA) loses out in UWO case

Dollar Handcuffs

The realities of dealing with Unexplained Wealth Orders (UWOs) in practice were laid to bare as the UK’s National Crime Agency (NCA) failed in its High Court UWO case against the family of former Kazakhstan President Aliyev.

The UK’s attempt to investigate the alleged illicit or corrupt source of funds for major assets, such as central London property has proven a tough ask to get through the UK courts. In 2018, then-Prime Minister Theresa May introduced Unexplained Wealth Orders which enabled UK assets to be frozen until the source of funds used to acquire such assets had been properly explained.

The assets frozen are all located in London and are estimated to be worth some £80m, and consist of a mansion in Hampstead, a flat in Chelsea and a house in Highgate. The Hampstead mansion is occupied by Nurali Aliyev, the grandson of former Kazakh president Nursultan Nazarbayev, and family.

The NCA has barred any attempt to sell the assets. It maintains that they were bought with money linked to Rakhat Aliyev – Nurali Aliyev’s father and the former president’s son-in-law. Rakhat Aliyev was found hanged in an Austrian jail in 2015 having previously been charged with the murder of two bankers in 2007.

The ultimate beneficial owners of the three properties — Rakhat Aliyev’s ex-wife, Dariga Nazarbayeva, Senate Chair in Kazakhstan and daughter of former Kazakh president Nursultan Nazarbayev, and her son, Nurali Aliyev — applied to the high court to discharge the UWOs.

The High Court judgment overturned all three UWOs, ruling unreliable “the NCA’s assumption” that Rakhat Aliyev was the source of the funds used to purchase the assets. Instead, the High Court maintained that there was “cogent evidence” that Nazarbayeva and Nurali Aliyev had founded the companies that owned the properties and the funds to purchase them.

It remains to be seen how the subsequent appeal will progress, but it is already becoming evident that legal challenges to UWOs may well be successful in future. This is yet another indication of the significant obstacles facing would-be legislative attempts to force ultra high net worth individuals (UHNWs) to explain the proceeds of their wealth, particularly where this involves cross-jurisdictional affairs. In the recent rush to transparency and draconian measures branded as directed at full disclosure, it is as well to consider the need to respect privacy, confidentiality, and above all, the presumed innocence of the defendant.

Sadly, too many transparency initiatives are no more than poorly-disguised attempts to exact more fiscal revenue – which inevitably leads to a presumption of guilt at the outset. Worse still, the reputation of London and the UK – in this era of UWOs – has been somewhat damaged. Whatever the outcome of this case, the defendants have been subjected to having their assets frozen, and many ultra high net worth investors may hesitate before rushing to invest in the London property market after this episode – with the head of the NCA threatening to push for further legislation should UWOs not suffice. The NCA will appeal this ruling.