Unexplained wealth orders in Gibraltar, explained

On October 22, 2024, the Gibraltar Parliament passed an amendment to the Proceeds of Crime Act, establishing the framework for the use in Gibraltar of Unexplained Wealth Orders (‘UWO’). The amendment introduces in Gibraltar a new and additional UWO capability for law enforcement authorities in Gibraltar which is based on the UK’s own UWO framework.

What is an Unexplained Wealth Order?

Unexplained Wealth Orders are court-issued orders compelling individuals or entities to provide a clear and detailed account of how they obtained specific assets. These assets must be worth more than £50,000. If a satisfactory explanation is not given, the property may be presumed to be recoverable under civil forfeiture laws.

These orders are designed to allow authorities to request explanations from individuals or entities about how they acquired assets valued above a certain threshold when legitimate income sources appear insufficient to justify the person/entity’s wealth.

As was pointed out by Nigel Feetham MP, KC, Gibraltar’s Minister for Justice, the passing into law of these provisions marks a significant step in Gibraltar’s work to maintain alignment and compliance with international standards to continue to ensure transparency in the financial system and the deterrence of illicit activity.

Who can apply for an Unexplained Wealth Order

In Gibraltar, applications for UWOs can be made by various enforcement authorities, including, the Royal Gibraltar Police, HM Customs, the Attorney General, and other designated persons as authorised by the Minister of Justice.

This broad scope ensures that various agencies involved in enforcing financial regulations can leverage UWOs to enhance transparency and accountability.

To issue an Unexplained Wealth Order, the Supreme Court of Gibraltar must be satisfied that:

• The individual or entity holds property valued at over £50,000.
• There are reasonable grounds to suspect that the respondent’s known sources of lawful income would not have been sufficient to obtain the property in question.
• The respondent is either a politically exposed person (PEP) or someone suspected of involvement in serious crime.

The requirement to justify large assets places the onus on individuals to demonstrate that their wealth was obtained through legitimate means.

What are the consequences of non-compliance with a UWO?

If a respondent does not adequately address the questions posed by the order or provides false or misleading information, the asset in question is presumed to be recoverable. This means it could be subject to confiscation proceedings under civil recovery powers.

Additionally, making a false statement in response to a UWO could lead to criminal prosecution, with penalties including imprisonment for up to two years or substantial fines.

Role of the Supreme Court and Interim Freezing Orders

In addition to enabling the issue of UWOs, the amendment has also enabled the issue by the Supreme Court in Gibraltar of interim freezing orders (‘IFO’). These orders prevent the disposal of assets while investigations are ongoing, reducing the risk of asset dissipation before legal action is taken. This additional safeguard works to ensure that any potential recovery or confiscation actions are not undermined by transfers or sales of relevant property.

Impact on Financial Crime and Transparency

The introduction of UWOs strengthens Gibraltar’s anti-money laundering (AML) framework. The Minister indicated that “the…regime was unanimously recommended to the Government of Gibraltar by law enforcement and regulatory bodies. There is therefore a strong consensus by those who are on the front line.”

By enabling enforcement authorities to target assets suspected to be linked to criminal activity or corruption, the amendment aims to deter illicit financial activity and reinforces the integrity of the jurisdiction’s financial system. In the words of the Minister, “This remains especially important in the context of Gibraltar’s next Moneyval/FATF evaluation.”

He concluded that “UWOs serve as a proactive and powerful mechanism to tackle money laundering and serious crime. It is an important piece of legislation.  It will ensure that Gibraltar remains at the forefront of the global fight against serious crime.”

To watch the debate on the passing of the Act by the Gibraltar Parliament, click below: 

Debate on the Proceeds of Crime (Amendment) Act 2024

UPDATE - 28 March 2025

On 28 March 2025, the Minister for Justice, Trade and Industry, Nigel Feetham KC MP, published a new Code of Practice on Unexplained Wealth Orders (UWOs) and Interim Freezing Orders (IFOs) under the Proceeds of Crime Act 2015. The Code provides clear guidance to enforcement authorities, legal practitioners, and the courts on the responsible and lawful use of these investigative tools.

The Code clarifies the statutory criteria for making UWO applications, outlines procedural safeguards, and explains how UWOs may support civil recovery, disrupt criminal activity, or advance investigations into illicit finance. It also offers practical direction on legal privilege, privacy rights, and procedural fairness, ensuring consistency in application and safeguarding constitutional rights.

Importantly, the Code reflects alignment with the legal standards of England and Wales while being tailored to Gibraltar’s unique enforcement environment and risk profile.

Minister Feetham stated: "The publication of this Code marks another step in Gibraltar’s commitment to strengthening our tools for tackling financial crime... It provides a practical and principled foundation for using these powers responsibly."

The Code is now in effect and available online via the Gibraltar Laws website and at various government and enforcement offices.

To review the code in full, click the following link:

https://gibraltarlaws.gov.gi/legislations/code-of-practice-unexplained-wealth-orders-and-interim-freezing-orders-7610 

Summary of Code

Key Features of the Code of Practice on UWOs and IFOs

Clear Statutory Guidance: The Code outlines the legal tests and procedural steps for applying for UWOs and associated interim freezing orders under the Proceeds of Crime Act 2015.

Applicable Authorities: Only enforcement authorities—such as the Royal Gibraltar Police, HM Customs, the Attorney General, or others designated by the Minister—may apply for UWOs.

Threshold and Criteria: UWOs can be applied to assets valued over £50,000 where there are reasonable grounds to suspect they were obtained through unlawful conduct or where lawful income appears insufficient.

Politically Exposed Persons (PEPs): UWOs may also be issued where the respondent is a PEP outside Gibraltar, the UK, or the EEA—without needing to show involvement in serious crime.

Court Oversight: The Supreme Court must approve all applications, including the response timeframe and any accompanying interim freezing orders.

Response Requirements: Respondents must provide a detailed explanation of how assets were acquired. Non-compliance leads to a presumption that assets are recoverable under civil forfeiture laws.

Legal Protections: The Code emphasizes safeguards around legal privilege, privacy rights, proportionality, and constitutional protections against unlawful deprivation of property.

Practical Tools for Enforcement: UWOs are framed as an alternative to traditional investigative tools, particularly useful in cases where other avenues, like mutual legal assistance, may be ineffective or time-consuming.

Admissibility and Sanctions: The Code is admissible in court, and failure to comply may impact judicial interpretation. Making misleading statements in response to a UWO can lead to criminal prosecution.

Interim Freezing Orders: These prevent dissipation of assets while UWOs are in force, and can be extended by the court for up to 186 days if necessary.