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Anton Imennov: English Tricks, or How Wealthy Russians Will Be Checked in Great Britain. "Ekho Moskvy", 13 April 2018

I have recently spoken in London to a Royal advocate who defended various Russian oligarchs. I'm not going to mention his name, but he is definitely included into top ten. After a routine couple of glasses of whiskey our conversation smoothly passed to Putin and Skripal and then to the Criminal Finances Act which had come into force and authorized law courts to issue an Unexplained Wealth Warrant allowing authorities from 31 January 2018 to freeze assets from £ 50,000 and start an investigation if their owner cannot explain their origin. If the owner of the money fails to give a proper explanation, their possessions may be arrested and confiscated. It's that very law which disturbs our business elite's night sleep. 

The law is simple and treacherous at the same time: this warrant may be issued by law courts of the United Kingdom as soon as the law comes into force. The new law has force not only in Great Britain, but also inside and outside the European economic zone. And that is important. 

My drinking companion confessed that at first that had seemed to him another political speculation, but as the situation developed,nobody doubted that it was in ernest and for a long time. Mass media quoted the UK PM and tried to find analogy with the popular serial "McMafia" about life of the wealthy Russians in London who were unlikely to give an account of their first million. 

In practice this law will work in the following way – let's take Roman Abramovitch, an obviously Russian oligarch, as an example. He has lived in London for a long time and has everything here: his family, suppose, a collection of old and not very old autos, an expensive mansion in Kensington, and a very serious business in Russia, of course. It can't be otherwise, for he used to be  a governor of a very cold region. And, as everyone knows, business is always closely interwoven with politics in our country. Quite of a sudden, Mr Abramovitch who dreams of being granted a title of a lord, becomes a toxic PEP (politically exposed person) instead. This amusing abbreviation brings not pride, but pain to its owners. 

But this is not so very serious yet. Now Abramovitch is at risk not only as PEP, but as the owner of expensive real estate. 

But, as a matter of fact, the order doesn't increase authority of the British law-enforcement and appears to be a tool in investigation in order to get certain information from the suspects. The law-enforcement cannot get a warrant whenever they wish. It is the 

competence of the High Court of London, hence the warrant can be issued only if there is enough evidence that a certain person owns property which costs much more than his/her declared income and he/she is also a PEP. If a person is not affiliated with crime and is not a PEP, the law-enforcement cannot request the warrant in court. Moreover, if a person doesn't meet these criteria, no one has the right to demand his/her explanations concerning property ownership only due to the fact that his/her assets exceed his/her income, regardless of the cost of his/her real property. 

Who can apply to the High Court to receive the warrant?

The Executive Authority including: 

  • National Crime Agency
  • HM's Revenue and Customs
  • Financial Conduct Authority
  • Serious Fraud Office
  • Crown Prosecution Service

 

If a warrant is shown to Abramovitch, he, as the owner of real property will have to give explanations about the nature of a certain object of real estate and his share in it, and also explain how he acquired it if the suspicion occurs that the declared income of the defendant is not enough to purchase this asset . Moreover, the warrant may be issued if there are reasonable grounds to suppose that a person is (or was) connected with criminal activity. The formulation used in the law is rather vague and may be interpreted in different ways, therefore it is not quite clear who in particular is the subject of the law. But due to the creators of the serial McMafia, rumours that the main goal of the British authorities was oligarchs from Russia and the CIS, appeared in mass media. And, between you and me, that is true. 

Just two weeks after the law came into force assets of one foreign PEP (supposedly from Central Asia) costing £22 million were arrested. Nevertheless, the new law arouses a lot of questions and nobody knows yet how  it will be applied. For instance, there are quite a lot of people from Russia and the CIS living in Great Britain and formerly holding high positions in their countries but who later got asylum and another immigration status in Great Britain. They may have been connected with politics. Do they meet the PEP criteria?

Nobody knows the answer. Moreover, if capital had been earned many years ago (for example, during privatization) and real property bought in Great Britain with this money, but the current income is considerably lower than the required level, how will the law be applied? There is no current practice yet but it will definitely appear in the near future. 

English lawyers consider that the London police will soon get some more warrants for the arrest of property of the unidentified origin, because there is political demand and will and also new tools which should be tested. If authorities succeed in arresting and confiscating real property belonging to some oligarchs, this measure will inevitably cause departure of investors. As a result, elite real property in London may loose in price and interest and trigger exodus of wealthy people from the Foggy Albion. By the way, my juridical drinking companion doesn't believe in the latter. When I asked him about it, he hesitated for a while, smiled and said, - Then, what are we, advocates, for? The government may want whatsoever. Today it wants one thing, tomorrow - another. Every government has its term, but English Justice is for ever! - So he concluded and emptied his glass in a swallow. 

Anton Imennov, advocate, managing partner, Pen & Paper Moscow office