Unexplained wealth orders: an evolving approach to enhancing the effectiveness of the anti-money laundering regime in the United Kingdom


In its 2018 Mutual Evaluation Report (MER) on the United Kingdom’s antimoney laundering and countering the financing of terrorism (AML/CFT) measures, the Financial Action Task Force (FATF) analysed the level of UK compliance with the FATF Recommendations and the effectiveness of the United Kingdom’s AML/CFT regime.[1] According to the MER, the United Kingdom has in place an effective AML/CFT regime and sanctions imposed for money laundering (ML) are broadly effective, proportionate, and dissuasive.[2] Notwithstanding the highly positive FATF evaluation report, however, research demonstrates that the AML regime in the United Kingdom does not sufficiently disrupt ML and terrorist financing (TF).[3] Indeed, the MER did acknowledge that major improvements are still needed to strengthen supervision and implementation of preventive measures and to ensure that financial intelligence is fully exploited.[4]

The stance adopted in this chapter is that a continuous review of AML law is needed to close loopholes and to improve efficiency. As AML law evolves, gaps are inevitable, and criminals can exploit such gaps to launder proceeds of crime. Thus, the law is regularly amended to confront new threats and to remedy defects in the law. For example, the law had expanded to cover regulated persons that, hitherto, either were not covered or were partially covered. This need for action was evident following the 9/11 attacks when the Money Laundering Regulations

2001 were issued to bring bureau de change and money services businesses within the scope of the AML regime.[5] Despite such legislative efforts, there is no sign that the spate of money laundering is reducing.[6] Indeed, in 2017, new Money Laundering Regulations[7] were introduced in the United Kingdom in response to the European Union (EU) Fourth Money Laundering Directive,[8] whilst in 2018, the EU Fifth Money Laundering Directive[9] was passed, which will entail further changes to the AML regime, such as the extension to art dealers.

Against this context of an expanding and deepening AML regime, it is important to also consider effectiveness.[10] Taking its ordinary dictionary meaning, the term ‘effective’ means ‘successful in producing a desired or intended result.’[11] Although assessing the effectiveness of the AML regime using quantitative methods is difficult due to the lack of data on the actual volume of money laundering,[12] it is not impossible to assess the effectiveness of the regime using qualitative methods. Effectiveness of an item of legislation is largely determined by (a) the purpose of the legislation (which sets the benchmark for what the legislation aims to achieve), (b) the substantive content and legislative expression (which determine how the law will achieve the desired results and how this aspiration is communicated to its subjects), (c) the overarching structure (determines how the new provisions interact with the legal system), and (d) the real-life results of legislation (indicates what has been achieved).[13]

Effectiveness reflects the relationship between the purpose and the effects of legislation and expresses the extent to which it is capable of influencing the behaviour of the target population towards the desired direction.[14] [15] The effectiveness of AML law can be determined by critically examining the extent to which the law in practical terms performs the functions it is designed for, as well as examining the burden the AML regime places on regulated persons.9 In this context, effective AML law and practice would disrupt the illicit flow of proceeds of crime. According to the UK government’s Action Plan 2016:

A successful anti-money laundering and counterterrorist finance regime will result in the relentless disruption of money laundering and terrorist finance activities, the prosecution of those responsible and the recovery of the proceeds of crime. A successful regime will dissuade those seeking to undertake money laundering and terrorist finance activities from doing so.[16]

Alongside consideration of ‘effectiveness,’ it is also useful to consider the term -‘disruption’ - which appears in this quote: ‘Disruption’ means ‘an interruption in the usual way that a system, process, or event works.’[17] According to the National Crime Agency (NCA), ‘disruption’ is a measurement of impact against serious organised crime.[18] So, what impact has the UK AML law had against ML and TF? According to the MER, the United Kingdom has in place an effective AML/ CFT regime and sanctions imposed for ML are broadly effective, proportionate, and dissuasive.[19] The United Kingdom also uses alternative methods to disrupt money laundering:

Where a conviction for ML cannot be obtained, UK authorities are able to utilise various tools to disrupt and sanction ML, including pursuing alternative offences, asset recovery, tax investigations, or orders to restrict activity.[20]

The 2018 MER boosts the UK government’s confidence in its fight against the flow of dirty money and TF, not least given that out of the 60 countries evaluated, the United Kingdom has been adjudged to have one of the toughest AML regimes in the world - stronger than any other country assessed to date.[21] Reacting to the 2018 MER, John Glen, then Economic Secretary to the Treasury and City Minister, said,

There is absolutely no place for dirty money or the people that launder it in our country, so I am incredibly proud that today’s report confirms that the UK has one of the strongest regimes in the world for deterring these criminals . . . we will continue to improve our defences and work with our international partners to find, disrupt, and prosecute anyone dealing in illicit 22


Similarly, Ben Wallace, then Minister for Security and Economic Crime, said,

The UK has taken a leading role in the global fight against illicit finance. I’m delighted with today’s report which shows our efforts are being recognised, and sends a strong message to criminals that we will come for them, their assets and their money.[22] [22]

Notwithstanding the positive soundings in the wake of the FATE MER of 2018, it is important to approach such plaudits with caution. Indeed, previous research by this author indicates that a number of factors undermine the effectiveness of AML law and practice. These factors include providing a large volume of data, shifting the responsibility for detecting money laundering from the government to the private sector, emphasising ‘following the money,’ collaborating with insiders, and shifting the focus from predicate crimes to money laundering.[24] Furthermore, the fact that the United Kingdom remains central to global ML schemes brings into question the relevance of this evaluation.[25]

Because of the ineffectiveness of the AML regime, certain measures need to be taken to enhance its disruptive effect. This chapter explores an important development in this regard - namely, the new unexplained wealth order (UWO) regime. This chapter argues that whilst the introduction of the UWO into the UK AML regime is a step in the right direction, there are hurdles to a successful UWO application. Further, it is likely that respondents to UWOs may initiate human rights challenges to orders made against them. This chapter thus discusses the UWO and the obstacles associated with its application. The chapter then analyses human rights issues likely to arise from UWO proceedings.

  • [1] Financial Action Task Force, ‘Anti-money laundering and counter-terrorist financing measures - United Kingdom: Mutual Evaluation Report’ (, December 2018).
  • [2] Ibid., 67.
  • [3] Yakubu, S., PhD Thesis: A Critical Appraisal of the Law and Practice Relating to Money Laundering in the UK and USA (University of London, 2017); Home Office and Her Majesty’s Treasury, UK Action Plan on Anti-Money Laundering and Counter-Terrorist Financing 2016 (Action Plan 2016) 7, 8-9; Harvey, J., ‘An evaluation of money laundering policies’ (2005) 8(4) Journal of Money Laundering Control 339, 341.
  • [4] Financial Action Task Force (fn 1) 5; Keatinge, T. et al., ‘No rest for the wicked: Driving change in the UK’s post-FATF evaluation AML regime’ (, Whitehall Report 1-19, Royal United for Services Institute, 2019).
  • [5] Money Laundering Regulations 2001, SI 2001/3641. See Alexander, R., ‘The money laundering regulations’ (2004) 8 Journal of Money Laundering Control 75.
  • [6] Harris, M., ‘Unexplained wealth orders: The new anti-money laundering weapon’ (2018) 7(6) Compliance and Risk Journal 6.
  • [7] Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692.
  • [8] Directive 2015/849 of the European Parliament and of the Council of 20 May 2015.
  • [9] Directive 2018/843 of the European Parliament and of the Council of 30 May 2018.
  • [10] See Unger, B. et al., The Economic and Legal Effectiveness of the European Union’s AntiMoney Laundering Policy (Edward Elgar, 2014).
  • [11] Oxford Dictionary online ().
  • [12] Reuter, P. and Truman, E., Chasing Dirty Money: The Fight against Money Laundering (Institute for International Economics, 2004) 192.
  • [13] Mousmouti, M., ‘The “effectiveness test” as a tool for law reform’ (2014) 2(1) LALS Student Law Review 5.
  • [14] Ibid., 4 (citing Xanthaki, H., ‘On transferability of legislative solutions: The functionality test’ in Stefanou, C. and Xantaki, H. (eds.), Drafting Legislation: A Modern Approach (Ashgate, 2008) 17).
  • [15] Her Majesty’s Treasury, Anti-Money Laundering and Counter Terrorist Finance Supervision Report 2014-15 (2016) 11 (describing an effective AML/CFT regime as one that focuses resources proportionately on the risks and reduces unnecessary burdens on business that do not effectively prevent ML and TF).
  • [16] Home Office and Her Majesty’s Treasury, UK Action Plan on Anti-Money Laundering and Counter-Terrorist Financing 2016 (2016) 9.
  • [17] Cambridge Dictionary ().
  • [18] National Crime Agency, National Strategic Assessment of Serious and Organised Crime (2016)9.
  • [19] Financial Action Task Force (fn 1) 67.
  • [20] Ibid., 69.
  • [21] Her Majesty’s Treasury, ‘UK Takes Top Spot in Fight against Dirty Money: New Report from the Financial Action Task Force Ranks the UK World-leading in the Fight against Illicit Finance’ (, 7 December 2018).
  • [22] Ibid.
  • [23] Ibid.
  • [24] Yaktibu (th 3) 299-312.
  • [25] Keatinge, T., 'RUSI experts react to UK’s Financial Action Task Force Mutual Evaluation Report’ (, 2018).
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