UK’s Serious Fraud Office secures its first Unexplained Wealth Order

Key takeaways

1. The Serious Fraud Office (the “SFO”) has obtained its first Unexplained Wealth Order (the “UWO”), against the ex–wife of a convicted fraudster, becoming only the second law enforcement authority (after the NCA) to use the tool since its introduction in 2017.
2. Director of the SFO, Nick Ephgrave QPM, commented that the UWO “is a milestone case for the SFO”, potentially signalling an increased appetite at the SFO to make use of this tool. This may reflect the recent reforms to UWOs, introduced by the Economic Crime (Transparency and Enforcement) Act 2022 (“ECTEA”), which include costs protections for enforcement authorities.

Why this matters for you

• Requests for information: financial institutions may be asked by customers who are respondents to UWOs to assist with providing information about the means by which relevant property was acquired
• Client review: financial institutions should consider their reporting obligations and whether enhanced account monitoring or an account review are appropriate in the event they become aware of a UWO in respect of a customer
• Final recovery: A UWO is an investigatory tool, not a recovery remedy, meaning that once a property is determined to be recoverable under a UWO, further steps to obtain possession of the property are likely to follow
• The future: The SFO is only the second investigating authority, after the NCA, to seek a UWO. In light of recent legislative changes, this may signal an increased appetite at the SFO to seek further UWOs in the future

The UWO

Following a hearing at the Royal Courts of Justice, Mr Justice Pepperall granted the SFO a UWO freezing a Lake District property allegedly acquired with the proceeds of a £100 million fraud. The property, which has an estimated value of approximately £1.5 million, is owned by Claire Schools, the ex–wife of Timothy Schools, who was imprisoned in 2022, following his conviction for fraud.

Under the terms of the UWO, Ms Schools must provide detailed information, within 28 days of the date of the UWO, of how the property was acquired. The SFO may use that information if it applies to seize the property in the future. In the meantime, should Ms Schools sell the property, the proceeds of the sale will be secured by the UWO.

What is a UWO?

A UWO is an investigatory tool (not a final recovery remedy) that compels its respondent(s) to provide details of:

• their ownership of specified property; and
• the means by which the property in question was acquired

Section 1 of the Criminal Finances Act 2017 amended the Proceeds of Crime Act 2002 (“POCA”) to create the legislative basis for UWOs. Per sections 362A and 362B of POCA, in applying for a UWO, an enforcement authority must:

• specify the property in question
• specify the identity of the person the enforcement authority believes holds the property
• satisfy the High Court that there is reasonable cause to believe that the
  • respondent holds the property; and
  • respondent’s interest in the property is greater than £50,000; and
• satisfy the High Court that
  • the respondent is a politically exposed person; or
  • there are reasonable grounds for suspecting that
    • the respondent; or
    • a person connected with the respondent is, or has been, involved in serious crime (whether in the UK or abroad)

Significantly, once a UWO has been granted, the burden of proof is reversed, meaning that the respondent must prove that the property subject to the UWO was acquired by lawful means. If the respondent subsequently fails to do so (or does not respond at all), the specified property is presumed to be recoverable, pursuant to section 362C(2) of POCA.

Significantly:

• no underlying criminal conviction is required before a UWO can be sought (as was the case with Ms Schools); and
• following the reforms introduced by ECTEA, a law enforcement authority will not be liable for the costs of a respondent to a UWO, including when a respondent successfully applies to have the UWO discharged or varied, provided the law enforcement authority has acted reasonably

The aforementioned features therefore make UWOs a powerful tool in the pursuit of the proceeds of criminal activity.

Further reading

• The SFO’s press release in respect of this matter.
• The Home Office’s annual report for 2023–2024 regarding UWOs.

Past articles from the team on court orders including freezing orders, NPOs, third party debt orders, search orders and disclosure orders, can be found on our dedicated Court Orders page.