Account Freezing Orders | Funds Frozen by Law Enforcement Agencies
An Account Freezing Order (‘an AFO’) prohibits each person by or for whom the account to which the Order applies from making withdrawals or payments from the account.
An AFO, inter alia, enables law enforcement agencies to prevent disposal of assets, suspected to have been gained as the result of criminal activity, pending the conclusion of further investigations and, where appropriate, forfeiture proceedings/criminal prosecution.
The overriding intent is to prevent suspected criminals from benefiting from their illegal conduct by dissipating assets and preventing subsequent access to and recovery of the same once the full investigation process has concluded.
Tim Thompson of Kangs Solicitors considers various aspects of an AFO.
Imposition of an AFO
Applications for an AFO, generally sought by law enforcement agencies such as HMRC and the National Crime Agency (NCA), are made to a Magistrates’ Court where the account(s) sought to be frozen holds a balance of £1,000 or more.
An Application for an AFO frequently follows the filing of a ‘Suspicious Activity Report (‘SAR’) to the NCA by a bank when it is suspected that such account is being operated in conjunction with criminal activity.
Upon receipt of a SAR, the NCA has seven days to respond and, thereafter, a further thirty- one Calendar days, upon request, during which period the account will be frozen.
Having investigated the origin of the funds in the account, where necessary, the NCA will write to the individual in question requiring, within seven days a full explanation of their provenance.
Where the NCA is either unsatisfied with the response or fails to receive one, it may apply for an AFO in respect of the suspect account.
In respect of an AFO, the Proceeds of Crime Act 2002 (‘POCA’) provides:
‘303Z1 Application for account freezing order
(1)This section applies if an enforcement officer has reasonable grounds for suspecting that money held in an account maintained with a relevant financial institution—
(a) is recoverable property, or
(b) is intended by any person for use in unlawful conduct.
(2) Where this section applies (but subject to section 303Z2) the enforcement officer may apply to the relevant court for an account freezing order in relation to the account in which the money is held.
(3) For the purposes of this Chapter—
(a) an account freezing order is an order that, subject to any exclusions (see section 303Z5), prohibits each person by or for whom the account to which the order applies is operated from making withdrawals or payments from the account;
(b) an account is operated by or for a person if the person is an account holder or a signatory or identified as a beneficiary in relation to the account.
(4) An application for an account freezing order may be made without notice if the circumstances of the case are such that notice of the application would prejudice the taking of any steps under this Chapter to forfeit money that is recoverable property or intended by any person for use in unlawful conduct.
(5) The money referred to in subsection (1) may be all or part of the credit balance of the account.’
Procedural Considerations
- ‘Reasonable grounds for suspecting’ is a broad and far reaching requirement with the result that the evidential burden to meet is comparatively low i.e. on the balance of probabilities it need only be shown that the funds are recoverable property or intended for use in criminal conduct.
- Once an AFO has been granted, it can remain in place for a period up to two years from the date it was made. Typically, however, Orders are made for a period of six months, with the option to extend on Application.
- If, after investigation, it is believed that the funds represent the proceeds of crime, Notice of Intent to apply for the forfeiture of the funds will be served on the account holder(s).
Exclusions and Variations
Upon the making of an AFO, it is recognised by the court that certain funds may have to be released to cover approved expenditure.
POCA provides:
‘303Z5 Exclusions
(1) The power to vary an account freezing order includes (amongst other things) power to make exclusions from the prohibition on making withdrawals or payments from the account to which the order applies.
(2) Exclusions from the prohibition may also be made when the order is made.
(3) An exclusion may (amongst other things) make provision for the purpose of enabling a person by or for whom the account is operated—
(a) to meet the person's reasonable living expenses, or
(b) to carry on any trade, business, profession or occupation.
(4) An exclusion may be made subject to conditions.
(5) Where a magistrates' court exercises the power to make an exclusion for the purpose of enabling a person to meet legal expenses that the person has incurred, or may incur, in respect of proceedings under this Part, it must ensure that the exclusion—
(a) is limited to reasonable legal expenses that the person has reasonably incurred or that the person reasonably incurs,
(b) specifies the total amount that may be released for legal expenses in pursuance of the exclusion, and
(c) is made subject to the same conditions as would be the required conditions (see section 286A) if the order had been made under section 245A (in addition to any conditions imposed under subsection (4)).
(6) A magistrates' court, in deciding whether to make an exclusion for the purpose of enabling a person to meet legal expenses in respect of proceedings under this Part—
(a) must have regard to the desirability of the person being represented in any proceedings under this Part in which the person is a participant, and
(b) must disregard the possibility that legal representation of the person in any such proceedings might, were an exclusion not made—
(i) be made available under arrangements made for the purposes of Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, or
(ii) be funded by the Northern Ireland Legal Services Commission’
Contesting an AFO | Kangs Fraud Offences Defence Solicitors
Anyone subjected to an AFO may contest it by communication with the enforcement agency but, more realistically, through an Application to the court that imposed it.
POCA provides:
‘s.303Z4 Variation and setting aside of account freezing order
(1) The relevant court may at any time vary or set aside an account freezing order on an application made by—
(a) an enforcement officer, or
(b)any person affected by the order.’
Note
- Where multiple accounts operated by a number of individuals are frozen, the court may vary the AFO and release any account(s) which ceases to be of concern.
- Upon Application contesting any part of an AFO, the burden of proof lies with the Applicant to prove the legitimacy of the frozen funds.
How Can We Help?
Upon becoming aware of any Restraint or POCA proceedings of any nature it is essential that immediate expert advice is sought.
Stringent time limits are imposed and failure to comply may be penal. These proceedings are extremely technical and comprehensive and each step requires detailed attention.
As can be seen from the above, certain exclusions may apply in relation to the release of funds to pay, for example, legal fees, and reasonable business and living expenses. However, the real need for such funds has to be established as does the amount requested.
Accordingly, any proposed Application requires considerable experience which the Team at Kangs Solicitors will be delighted to provide.
If we can be of assistance, our Team is available via telephone 0333 370 4333 and by email info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham and Manchester.
Alternatively, discussions can be held virtually through live conferencing or telephone.
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