Will Guernsey be affected by McMafia laws?

In January 2018, UK law enforcement agencies were given a new tool – the Unexplained Wealth Order (UWO).

Quickly dubbed ‘McMafia laws’ after a book and TV drama by journalist Misha Glenny, which explored the modern world of organised crime, the orders are already being used in the UK by bodies such as the National Crime Agency.

UWOs are an investigative tool intended to help UK law enforcement agencies target money laundering and make the UK less attractive as a place to keep illicit assets. An agency has to make an application to court to obtain a UWO.

A UWO doesn’t give the agency the power to recover assets but does require a respondent to explain how they lawfully acquired the asset in question. If they don’t respond or provide an inadequate answer, this could be used against them as evidence in civil recovery proceedings. It’s worth noting, however, that a UWO itself can’t be used for criminal proceedings.

Interestingly, there’s no requirement for a respondent to be a person. Financial services institutions, for example, can be served with a UWO in connection with an underlying client. There’s also no requirement for the asset to be located in the UK.

As a result, individuals or institutions such as trusts, companies or LLPs located in Guernsey could be impacted by UWOs.

Although a UWO isn’t directly enforceable in Guernsey or other non-UK jurisdictions, agencies are able to ask for foreign assistance to enforce the orders. So, it’s likely that UWOs will, in time, be registered and recognised in the Guernsey courts.

Because of this, it’s important that whether you’re an individual or acting on a behalf of an institution in Guernsey, you act quickly if served with a UWO and look for immediate advice.