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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

Unfriendly London: Britain is Going to Arrest the Property of Ukrainian Kleptocrats. And not Only

09.11.2016

Dmytro Shemelin, lawyer at Ilyashev & Partners Law Firm
Source: European Pravda

In spring 2017 the Britain is going to see a truly radical reform in the sphere of fighting financial crimes and corruption – introduction of sanctions in relation to sources of suspicious property, namely application of unexplained wealth order.

The new mechanism will allow British law enforcers to arrest hundreds of real estate objects which foreign citizens acquired in England at the expense of profits of uncertain origin.

The corresponding draft law – Criminal Finances Bill – was passed in the second reading in the House of Commons and by November 24 it must be reviewed by the committees.

It is no secret that foreign nationals treat Britain, and especially London, as a very attractive place for investment of money which was earned by relatively legal way. Under the estimates of the National Crime Agency annual turnover of “dirty money” in England reaches up to £ 100 bln (more than the amount of last year’s GDP of Ukraine) – and these sums are mostly spent on purchase of expensive real estate, objects of art, collectible automobiles, and jewelry.

Until now, even having suspicions on illegal origin of the money, British authorities could rarely do anything: they needed a verdict in a criminal case upheld in the country of origin of the money or in the Britain itself. It is clear that in reality the corrupt individuals have many possibilities to obstruct or infinitely delay the court proceedings at their home countries.

What is more, even if the verdict is passed as a result of acts of will demonstrated by the new state authorities there are a number of chances that the foreign criminal process will be carried out in contradiction to the British standards and the verdict will not be acknowledged by the British court.

As a result any arrest of property of a suspected corrupt person could not receive support in the form of the verdict which means that the state would have to compensate losses inflicted in connection with the arrest. In such case the British law-enforcement agencies did not want to run such risk.

Now the British climate may change radically.

Criminal Finances Bill stipulates that if the British authorities have only reasonable suspicions that the property cost of which exceeds £ 100 000.00 was acquired at the expense of proceeds from criminal activities, the court may issue a court order regarding the sources of suspicious property obliging the owner of the property to disclose the source of its acquisition.

Such court order may be immediately accompanied by the arrest of assets.

If the mentioned court order is ignored or is poorly executed competent authorities may foreclose the property as the one which was acquired at the expense of proceeds from illegal activities (Proceeds of Crime Act 2002).

Thus, the law will not require availability of the verdict regarding the owner of the property and of the proof that such property was acquired at the expense of criminal proceeds. It will be sufficient to have “reasonable grounds to suspect” that the property was acquired illegally.

What is more operation of law is not limited neither by time, nor by circle of potential owners – any property in Britain cost of which exceeds £ 100 000.00, regardless of when it was acquired and in whose name it was registered, may constitute a subject matter of such sanctions.

It is quite obvious what it can result in.

In its publication Transparency International, the global civil society organisation leading the fight against corruption, states that “there are hundreds of objects in the Great Britain which is suspected of being purchased at the expense of money received from corruption”.

According to the information of the British Land Registry only in the Great London offshore companies own 40 thousand real estate objects. According to calculations of the Guardian periodical the quantity of such objects in the City and Westminster reaches up to 10% of all the registered real estate.

Offshore companies own even the Admiralty Arch at the Trafalgar Square. Transparency International estimates the cost of the mentioned objects in “billions of pounds”.

Of course application of foreclosure to the mentioned objects will be favorably taken by the British state budget which is suffering because of Brexit.

What is even worse that following beta-testing of the procedure in England similar procedures will be introduced in other countries, at least within the EU. The English however are not inclined to thoughtlessly kill investment attractiveness of their own state. It is totally possible that similar limitations will be insistently recommend all over the world as “a good practice in civilized countries”.

In course of time villas in Toscana and Corsica, mansions in Cote d’Azur and Lake of Geneva, Austrian and Swiss hotels, simply saying all “escape hatches” of our fellow countrymen (who are traditionally fond of investing their money abroad into real estate), may get into the firing line.

Undoubtedly application of unexplained wealth order is not as simple a procedure as it may seem.

Firstly, and this is a key problem, to finally impose foreclosure to the property (which was arrested on the basis of unexplained wealth order) the authorities nevertheless will have to win a court case – either criminal, or civil in which they will have to prove that the property was received at the expense of unlawful profits.

Of course, it is much easier to win using civil standard of proof (preponderance of the evidence) than to have the foreign corrupt official convicted in Britain under the criminal procedure. Nevertheless it needs to be expected that in the crosshairs will end up the assets in relation to which there have already been evidence of their unlawful origin.

Secondly, it is unclear how this concept will be treated by the European court of human rights.

Certainly the British draft law is trying to take the utmost regard for the requirements posed by the Convention: unexplained wealth order is to be issued only by court, only court may impose arrest onto the property and only thought the court procedure it is foreclosed. The draft law has won wide support among the expert community.

Nonetheless, it cannot be ruled out that once the first unexplained wealth orders are issued by the British court they will be finally tested within the walls of the European court.

Finally, one should not expect that the British will do all the work instead of us, Ukrainians, on prosecution of our corrupt officials abroad.

The matter is that according to the procedures stipulated by Criminal Finances Bill, 2002 is case of success the potential confiscated property is to be foreclosed for the benefit of the British state budget.

The British party may definitely take certain measures on transfer of foreclosed assets to the suffering parties in Ukraine but, in any case, only after full compensation of their own expenses spent on investigation, court proceedings etc.

So, in such a personal matter the British authorities are not to be trusted too much.

 
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