Here we will explain what an account freezing order is and how to respond effectively to an account freezing order.
An Account Freezing Order (“AFrO”) is an order made by a Court freezing funds in a bank or building society account. An AFrO is therefore made by a Magistrates’ Court (the “Court”). The Court will make the AFrO if a senior officer at a relevant agency (including the Serious Fraud Office, Her Majesty’s Revenue and Customs, the National Crime Agency or the Police) can persuade the Court that funds in the relevant account are:
- The proceeds of crime (either within or outside the UK), or
- Intended for use in criminal conduct.
Reasonable grounds to suspect that the funds are the proceeds of crime
For an AFrO to be granted, the relevant agency must persuade the Court on the balance of probabilities (i.e. more likely than not) that there are reasonable grounds to suspect that the funds in the account are the proceeds of crime or are intended for use in criminal conduct. Usually, this is not a significant obstacle for law enforcement to overcome. The evidence which law enforcement needs to provide the court at this stage is very limited.
Length of AFrO
If the Court does grant the AFrO then the funds in the account can be frozen for up to two years. This is to provide the relevant agency with time to investigate the legitimacy of the funds in the account.
What is an Account Forfeiture Order?
If following the imposition of an AFrO the relevant agency is of the view (following its investigation) that the funds in the account subject to the AFrO are the proceeds of crime or are intended for use in criminal conduct, then the relevant agency can apply for the funds in the relevant account to be forfeited. The forfeiture process involves offering the respondent a chance to object to forfeiture. If no objection is received within 30 days then the funds in the account are forfeited. If the respondent does raise an objection then the relevant authority must make an application to the Court for an Account Forfeiture Order (“AFO”) to forfeit the funds in the account.
Funds are the proceeds of crime
At this stage, for the AFO to be granted the relevant agency must persuade the Court on the balance of probabilities that the funds in the relevant account are the proceeds of crime (either within or outside the UK) or are intended for use in criminal conduct. This is a higher standard of proof for law enforcement to satisfy vis-a-vis the standard of proof required for the original AFrO. There is no requirement for there to be any criminal investigation open, nor any criminal conviction, against the respondent.
How to challenge an Account Freezing Order or an Account Forfeiture Order
It is important that individuals whose account(s) are subject to an AFrO should seek expert legal advice as soon as possible. An AFrO may be made with or without notice; as such, the first you may be aware of an AFrO is when you are notified that one has been granted. Applying for an AFrO, and if applicable an AFO, involves the relevant agency taking a staged approach and it is important to adopt a strategic response accordingly. As such, the most effective response will often involve a combination (or all) of the following (non-exhaustive) steps:
- Engaging with the relevant agency;
- Attending an interview (if appropriate);
- Making written representation accompanied by evidence;
- Trying to establish that there are (or were) insufficient grounds to persuade the Court to grant the AFrO and/or that there are insufficient grounds to persuade a Court to grant a AFO; and
- Establishing any procedurally incorrect actions taken by law enforcement.
Given the higher standard of proof, which law enforcement needs to satisfy at the AFO stage, it may be better for the account holder in some cases to contest the matter at this stage. It is critically important that the appropriate steps are taken during the investigation stage as these should bolster representations made if the matter does end up at a full forfeiture Court hearing. As such, early expert legal advice is always recommended.
Gherson’s white-collar crime team brings experience from both sides of the fence through experience leading investigations into financial crime and also representing individuals subject to such investigations. As such they are able to offer a bespoke and insightful strategy to offer the best chance to head-off any investigation at an early stage as possible. Please do not hesitate to contact us for advice, send us an e-mail, or alternatively, follow us on Twitter, Facebook, or LinkedIn to stay-up-to-date.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
Solicitor in our White Collar Crime Defence Team