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‘McMafia’ Ruling Dies In London Court As Family Of Former Kazakh President Unfreeze Assets

The U.K.’s attempt to make the family of former Kazakh President Nursultan Nazarbayev explain ownership of three London properties has failed. A London court today ruled that the National Crime Association had made “unreliable” assumptions over the ownership of the property.


In what is the first time an Unexplained Wealth Order has been dismissed, Mrs Justice Lang of London’s High Court discharged the orders on three London properties disclosed to be worth £39 million, £32 million and £9 million respectively.


Mrs Justice Lang said the NCA had not sufficiently proved that one Rakhat Aliyev, a senior Kazakhstan government official who died in an Austrian prison awaiting a murder trial, was the source of the funds used to buy the homes.


In March the BBC described the Billionaire’s Row “mansion” as having an “underground pool, tropical showers, a glass domed roof, a dedicated cinema and separate quarters for staff.”



-Mehmet Koruturk & Nurali Aliyev (r)


Frustration

The NCA has reacted with disappointment and promised to challenge the decision through appeal. A spokesperson said, “Today the High Court discharged Unexplained Wealth Orders against three individuals which were secured by NCA investigators last year. We disagree with this decision to discharge the UWOs and will be filing an appeal.”


Duncan Hames from Transparency International, describes the decision as a “setback” that highlights, “Major weaknesses in the U.K.’s defences against dirty money that should be addressed urgently.”


The U.K.’s National Crime Agency had attempted to use an “Unexplained Wealth Order”–an “investigative tool” that gives the U.K. power to seize the assets of a what’s known as a “politically exposed person” if they are unable to explain the source of their wealth.


The properties in question are allegedly owned by relatives of President Nursultan Nazarbayev through a complex network of offshore companies.


The court ruled that the use of complex offshore structures is not a crime in its own right and that the NCA had not presented enough evidence “beyond the complex structures used.”

Justice Lang ruled, “The use of complex offshore corporate structures or trusts is not, without more, a ground for believing that they have been set up, or are being used, for wrongful purposes, such as money laundering.”


Adding, “There are lawful reasons–privacy, security, tax mitigation–why very wealthy people invest their capital in complex offshore corporate structures or trusts. Of course, such structures may also be used to disguise money laundering, but there must be some additional evidential basis for such a belief.”


Big Blow

Today’s High Court ruling comes as a big blow to the crime agencies attempting to stop the flow of illegally obtained foreign money entering the U.K.


In May 2019 the U.K’s NCA had announced that an Unexplained Wealth Order for three London properties “linked to a politically exposed person believed to be involved in serious crime”, had been secured.


In March 2020 one London mansion was revealed to be owned by Nurali Aliyev, the grandson of Kazakhstan’s former President Nursultan Nazarbayev after the use of a so-called ‘McMafia’ Wealth Order was challenged.


Andy Lewis, Head of Asset Denial at the NCA, described Unexplained Wealth Orders as “a powerful tool in being able to investigate illicit finance flowing into the U.K.” And confirmed that the offshore companies allegedly linked to the family would now, “have to explain how the three properties were obtained.”


However, following today’s ruling, Nurali Aliyev has told Forbes that the judgment proves the orders were “inaccurate” and “part of a flawed investigation which was entirely without merit.”


Aliyev adds that, “The NCA deliberately ignored the relevant information I voluntarily provided and pursued a groundless and vicious legal action, including making shocking slurs against me, my family and my country.”


A disappointed Graeme Biggar, the NCA’s Director General of the National Economic Crime Centre, said: “The UK’s robust legal system is recognised worldwide and the ability to challenge decisions is a key part of that reputation. Unexplained Wealth Orders are new legislation and we always expected there would be significant legal challenge over their use.

“We disagree with this decision to discharge the UWOs and will be filing an appeal. These hearings will establish the case law on which future judgments will be based, so it is vital that we get this right.


“The NCA is tenacious. We have been very clear that we will use all the legislation at our disposal to pursue suspected illicit finance and we will continue to do so.”


Private Client Culture

The judge ruling mirrors the repeated claims from London’s Ultra High Net Worth (UHNW) private client services that the so-called McMacfia rule is not used casually by law enforcement officials.


Anna Buch, a partner at Devonshires, who represents high net worth individuals from Kazakhstan and other CIS states, said that although the NCA’s “quest” to ensure the U.K. is not “a safe haven for dirty money” is welcome, she adds, “there is growing panic among honest investors that they may unwittingly become the subject of so call McMafia orders.”


Buch warns that, “Honest foreign investors are concerned that they may find themselves subject of an Unexplained Wealth Order based on dubious allegations that they would need to challenge through the courts. As a result, many are now thinking twice about investing in the U.K. The NCA needs to ensure that UWOs are not abused or used arbitrarily so that honest investors are not put off from bringing their investment to the U.K.”


Source:

Forbes.com

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