On 17 January 2025, the Serious Fraud Office (SFO) was granted its first unexplained wealth order. The SFOs unexplained wealth order (UWO) related to a £1.5 million property owned by Claire Schools, the ex-wife of Timothy Schools, who was convicted in 2022 of five counts of fraudulent trading, fraud by abuse of position and money laundering.

The question that fails to be asked is if this will trigger the return of more widely use of UWOs?

What are unexplained wealth orders?

UWOs were introduced by section 1 of the Criminal Finances Act 2017. Their introduction was heralded as an important step in challenging illicit finances and, as the name would suggest, help recover the unexplained wealth of persons who often owned valuable assets, be it property, art, vehicles, planes, watches or jewellery. UWOs require respondents to explain the sources of the funds which enabled them to obtain certain assets.

To obtain an UWO, the following test has to be satisfied, following an application to the High Court:

1. There is reasonable cause to believe that the respondent has an interest in property valued over £50,000;

2. There are reasonable grounds for suspecting:

a. that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property; or

b. that the property has been obtained through unlawful conduct; and

3. The respondent is either:

a. A politically exposed person; or

b. There are reasonable grounds to believe that:

i. the respondent is, or has been, involved in serious crime (whether inside or outside of the UK); or

ii. the respondent is connected with a person who has been, or is involved in serious crime.

UWO can be applied for by various law enforcement agencies in the UK such as the National Crime Agency (NCA), HM Revenue Customs, Financial Conduct Authority (FCA), Director of the SFO or the Director of Public Prosecutions (i.e. Crown Prosecution Service).

If granted, it requires the respondent to provide a statement explaining (section 362A of POCA 2002):

 –  the nature and extent of the respondent’s interest in the property in respect of which the order is made;

 – explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met);

 – where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order; and

 – setting out such other information in connection with the property as may be so specified.

It is a criminal offence to deliberately make a statement that the person subject to the UWO knows to be false or misleading or recklessly makes a statement that is false or misleading, with a maximum sentence of two years imprisonment (section 326E of POCA 2002).

The History of unexplained wealth orders

Five years after their introduction, only nine UWOs had been successfully obtained. There had also been a number of high profile failures, and law enforcement agencies were concerned about the potential costs implications against them for making an unsuccessful application.

The regime was overhauled by amendments introduced by part 2 of the Economic Crime (Transparency and Enforcement) Act 2022. In short, these amendments granted greater protection for the applicants in terms of costs, as it requires the respondent to demonstrate that the enforcement agency either acted (a) unreasonably or (b) dishonestly or improperly; it allowed for a respondent to be a named officer of a company, rather than the individual, thereby enabling the targeting of ownership structures and shell companies; and also created an alternative test for UWOs to be granted where the Court is satisfied that the relevant assets have been obtained through unlawful conduct (see 2b above).

The future of unexplained wealth orders

The first use by the SFO of a UWO marks the clear intention of the Director of the SFO, Nick Ephgrave, to use the range of available tools to assist in enforcement. The use of an UWO here supplements the powers available to the criminal court to make a confiscation order in respect of tainted gifts, i.e. assets given away by a criminal. It opens the door to the use of civil recovery powers against the recipients of such alleged gifts.

Mr Ephgrave, in a press release, commented that “wherever criminal assets have been hidden or dispersed, we will progress our investigations with determination and explore new methods to recover funds for victims and the public purse.”

The SFO has indicated a willingness to try something new where circumstances permit. If they are successful, we may see UWOs take on a new lease of life, not just by the SFO, but by other agencies as a supplemental route to pursuing the proceeds of crime post-conviction and confiscation.