Rachel de Souza

Written by: Rachel de Souza

Rachel de Souza

Partner

Explain your wealth or have it seized

Anyone might think that London is awash with ‘dodgy’ money. The popularity of the BBC’s recent McMafia series combined with recent stories about a host of wealthy Russians pleading with the Kremlin to be allowed to return home without fear of prosecution, all give credence to this perception that some international business people who owe their wealth to corruption or other kinds of illegal activity, and they have then settled in London where they are able to live the high life without fear.

But is this true? The UK government has not been particularly vocal about the measures it has put in place over the last few years to tackle ill-gotten gains being enjoyed in the UK – but there are many of them. In particular, the government’s decision in the late 1990s to invest in a super computer to collect financial data, along with legislative changes such as the Common Reporting Standard (CRS), does mean that the Government has been taking decisive action. 

The CRS ensures overseas jurisdictions report to HMRC about funds held by UK residents. Anyone who has not come clean to HMRC about their foreign taxable wealth by 30 September this year, may be subject to penalties of up to 300 per cent of any unpaid tax, plus the tax itself and interest. 

In addition, the Unexplained Wealth Order (UWO) is the latest tool in the government’s armoury against money laundering. Extensive powers have been given to various government agencies to compel people to explain how they have been able to finance the acquisition of particular assets. 

The UWO is tightly targeted; it is not designed to catch the window cleaner who gets paid in cash. Firstly, only the High Court can issue an UWO. It can only do so if there are reasonable grounds to suspect that the individual is involved in serious crime and there must be a reasonable suspicion that the known income would be insufficient to enable acquisition of the property, which must be valued at least £50,000. 

Anti-money laundering procedures have already gone a long way to prevent illegal wealth coming into the UK. The UWO builds on this and will help target money that’s already here. None of this should cause problems for those who comply with the law, but the net is closing on dodgy money whenever it arrived.

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