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| Britain Is Targeting ‘Dirty Money’ With Unexplained Wealth Orders | Britain Is Targeting ‘Dirty Money’ With Unexplained Wealth Orders |
| (about 3 hours later) | |
| LONDON — The wife of an Azerbaijani banker dropped 30,000 pounds on chocolate in one purchase, amassed £3.5 million of designer French jewelry, and spent more than £150,000 on perfume. | LONDON — The wife of an Azerbaijani banker dropped 30,000 pounds on chocolate in one purchase, amassed £3.5 million of designer French jewelry, and spent more than £150,000 on perfume. |
| And that was just at one store. | And that was just at one store. |
| The extravagant spending by the woman, Zamira Hajiyeva, at the luxury British department store Harrods — which amounted to around £16 million pounds, or more than $20 million, over a decade — and other purchases made by her and her husband, Jahangir Hajiyev, raised one big question: Where did all that money come from? | The extravagant spending by the woman, Zamira Hajiyeva, at the luxury British department store Harrods — which amounted to around £16 million pounds, or more than $20 million, over a decade — and other purchases made by her and her husband, Jahangir Hajiyev, raised one big question: Where did all that money come from? |
| The British authorities, who have been trying to clean up Britain’s reputation as a haven for “dirty money,” now have a tool to find the answer: an unexplained wealth order. | The British authorities, who have been trying to clean up Britain’s reputation as a haven for “dirty money,” now have a tool to find the answer: an unexplained wealth order. |
| The order can require individuals to account for their wealth, and Ms. Hajiyeva had the unwelcome distinction last year of being the first person subject to one. This week, a second unexplained wealth order was issued for three London properties worth tens of millions of dollars that are linked to an unnamed “politically exposed person” — or a person whose prominent position in public life may make them vulnerable to corruption — and who is believed to be involved in serious crime, the national crime agency said Wednesday. | The order can require individuals to account for their wealth, and Ms. Hajiyeva had the unwelcome distinction last year of being the first person subject to one. This week, a second unexplained wealth order was issued for three London properties worth tens of millions of dollars that are linked to an unnamed “politically exposed person” — or a person whose prominent position in public life may make them vulnerable to corruption — and who is believed to be involved in serious crime, the national crime agency said Wednesday. |
| How do these court orders work and how can they stem the illicit flow of cash into Britain? | How do these court orders work and how can they stem the illicit flow of cash into Britain? |
| An unexplained wealth order is an investigative tool used by the authorities to compel people to explain their finances. According to British law, it requires a person to provide a detailed account of how they obtained a piece of property, whether that be real estate or goods. | An unexplained wealth order is an investigative tool used by the authorities to compel people to explain their finances. According to British law, it requires a person to provide a detailed account of how they obtained a piece of property, whether that be real estate or goods. |
| The order itself doesn’t require any criminal charges to be filed, a spokesman for the national crime agency explained, and it is similar to a search warrant. The order can be issued against items worth more than £50,000 and can be used in two instances: if the property owner is considered “politically exposed” or if they have been involved in serious crime. | The order itself doesn’t require any criminal charges to be filed, a spokesman for the national crime agency explained, and it is similar to a search warrant. The order can be issued against items worth more than £50,000 and can be used in two instances: if the property owner is considered “politically exposed” or if they have been involved in serious crime. |
| If a person is considered “politically exposed,” it has to be for their political or business connections in a country outside the European Economic Area. Implicated people from Britain or other European countries could still find their assets frozen under an unexplained wealth order, but only through the serious crime route. | If a person is considered “politically exposed,” it has to be for their political or business connections in a country outside the European Economic Area. Implicated people from Britain or other European countries could still find their assets frozen under an unexplained wealth order, but only through the serious crime route. |
| Experts say it is essentially a gateway into a civil recovery order, which allows the authorities to confiscate property. The court can also issue an interim freeze order to halt property from being sold or transferred by the owner while they investigate the source of the person’s wealth. | Experts say it is essentially a gateway into a civil recovery order, which allows the authorities to confiscate property. The court can also issue an interim freeze order to halt property from being sold or transferred by the owner while they investigate the source of the person’s wealth. |
| In Ms. Hajiyeva’s case, for example, a £1,190,000 Cartier diamond ring was seized by the national crime agency and held as part of its investigation. | In Ms. Hajiyeva’s case, for example, a £1,190,000 Cartier diamond ring was seized by the national crime agency and held as part of its investigation. |
| Unexplained wealth orders can be appealed in Britain’s high court, though the process can be long. If the person being investigated refuses to explain their wealth, the authorities can still confiscate their property. However, the burden of proof shifts, leaving it up to the authorities to prove the property was obtained with illicit funds instead of to the person being investigated to prove the funds are legitimate. | Unexplained wealth orders can be appealed in Britain’s high court, though the process can be long. If the person being investigated refuses to explain their wealth, the authorities can still confiscate their property. However, the burden of proof shifts, leaving it up to the authorities to prove the property was obtained with illicit funds instead of to the person being investigated to prove the funds are legitimate. |
| In February 2018, Britain’s High Court issued Ms. Hajiyeva an unexplained wealth order for two of her properties: a £12 million house in London and a golf course in southeastern England. If she fails to account for her wealth, she risks losing both properties. | In February 2018, Britain’s High Court issued Ms. Hajiyeva an unexplained wealth order for two of her properties: a £12 million house in London and a golf course in southeastern England. If she fails to account for her wealth, she risks losing both properties. |
| Her husband was the former chairman of the International Bank of Azerbaijan, a state-owned company, from 2001 to 2015, and was imprisoned in Azerbaijan in 2016 after being convicted of fraud and embezzlement. He is thought to have misappropriated about $3 billion, Reuters reported. | Her husband was the former chairman of the International Bank of Azerbaijan, a state-owned company, from 2001 to 2015, and was imprisoned in Azerbaijan in 2016 after being convicted of fraud and embezzlement. He is thought to have misappropriated about $3 billion, Reuters reported. |
| An offshore company is listed as the owner of the family’s London home. Ms. Hajiyeva’s spending patterns have been exposed in details in court proceedings, and many of her purchases were made on cards issued by the bank where her husband worked. She is still appealing her case. | An offshore company is listed as the owner of the family’s London home. Ms. Hajiyeva’s spending patterns have been exposed in details in court proceedings, and many of her purchases were made on cards issued by the bank where her husband worked. She is still appealing her case. |
| In the second, unrelated case, unexplained wealth orders were issued this week for three properties in London — worth a total of more than £80 million — that were purchased by offshore companies. | |
| But the national crime agency believes they are actually linked to a politically exposed person believed to be involved in serious crime, though they have not yet publicly identified that person. | But the national crime agency believes they are actually linked to a politically exposed person believed to be involved in serious crime, though they have not yet publicly identified that person. |
| Interim freeze orders have also been granted, meaning the properties cannot be sold while the investigation continues. | Interim freeze orders have also been granted, meaning the properties cannot be sold while the investigation continues. |
| Graeme Biggar, the director general of Britain’s National Economic Crime Center, said the latest order was part of an effort to halt the flow of illicit funds and end the misuse of the country’s financial structures. | Graeme Biggar, the director general of Britain’s National Economic Crime Center, said the latest order was part of an effort to halt the flow of illicit funds and end the misuse of the country’s financial structures. |
| “The purchase of prime property in London is a tactic used to launder money, and we will use all the powers available to us to target those who try to do this,” he said. | “The purchase of prime property in London is a tactic used to launder money, and we will use all the powers available to us to target those who try to do this,” he said. |
| It is still too early to tell whether the orders will have a deterrent effect, experts say. The system was introduced by David Cameron’s coalition government, said Neil Swift, a lawyer at a London firm who specializes in the unexplained wealth orders, “because they were concerned about the level of illicit wealth being stored at the London property market.” | It is still too early to tell whether the orders will have a deterrent effect, experts say. The system was introduced by David Cameron’s coalition government, said Neil Swift, a lawyer at a London firm who specializes in the unexplained wealth orders, “because they were concerned about the level of illicit wealth being stored at the London property market.” |
| But it didn’t officially come into law until January 2018, two years after Mr. Cameron resigned as prime minister, and it has only been used twice. | But it didn’t officially come into law until January 2018, two years after Mr. Cameron resigned as prime minister, and it has only been used twice. |
| Though the orders have been warmly received by anti-corruption organizations in Britain, some have criticized their scarcity. | Though the orders have been warmly received by anti-corruption organizations in Britain, some have criticized their scarcity. |
| “London has long been the playground of the world’s corrupt kleptocrats and oligarchs,” Duncan Hames, the director of policy at Transparency International U.K., a nonprofit organization, said in a statement on Wednesday. “It is very encouraging to see that this is at last being challenged.” | “London has long been the playground of the world’s corrupt kleptocrats and oligarchs,” Duncan Hames, the director of policy at Transparency International U.K., a nonprofit organization, said in a statement on Wednesday. “It is very encouraging to see that this is at last being challenged.” |
| But while the measures represent progress, there is “not yet a sufficient response to the magnitude of the problem,” he added. | But while the measures represent progress, there is “not yet a sufficient response to the magnitude of the problem,” he added. |
| The complexity of the unexplained wealth order process could be one reason the authorities have moved slowly, some legal experts suggest. | The complexity of the unexplained wealth order process could be one reason the authorities have moved slowly, some legal experts suggest. |
| Anna Bradshaw, a London-based lawyer specializing in unexplained wealth orders, said the authorities were most likely addressing the most clear-cut cases first. | Anna Bradshaw, a London-based lawyer specializing in unexplained wealth orders, said the authorities were most likely addressing the most clear-cut cases first. |
| “They know that it’s a controversial power, they know that it’s entirely unprecedented in the U.K.,” she said. “They are expecting legal challenges, so therefore they’re proceeding slowly.” | “They know that it’s a controversial power, they know that it’s entirely unprecedented in the U.K.,” she said. “They are expecting legal challenges, so therefore they’re proceeding slowly.” |
| They are also proceeding with caution, Ms. Bradshaw said, so as not be seen as targeting one specific group. | They are also proceeding with caution, Ms. Bradshaw said, so as not be seen as targeting one specific group. |
| “For example, if they were to apply for unexplained wealth orders only against Russian nationals then they might run into difficulties,” she said. | “For example, if they were to apply for unexplained wealth orders only against Russian nationals then they might run into difficulties,” she said. |