Hamraj Kang of Kangs Solicitors discusses the changes made to the Proceeds of Crime Act 2002 (POCA) by the enactment of the Criminal Finances Act 2017 and, in particular, the introduction of the new regime for Account Freezing Orders and Account Forfeiture Orders.

Kangs Solicitors regularly advises corporate and individual clients in relation to Account Freezing Orders and Account Forfeiture Orders as well as in relation to anti-money laundering regulations generally.

We are recognised by the leading law directories, the Legal 500 and Chambers & Partners, for our work in relation to financial fraud and financial restraint work.

We appreciate that any client being served with an Account Freezing Order requires immediate specialist legal advice and assistance.

For an initial no obligation consultation, please telephone our team of lawyers at any of our offices detailed below:

The Changes to POCA | Account Freezing Order Solicitors

The Criminal Finances Act 2017 came into force on 31st January 2018. Its effect is to insert new provisions into the existing POCA and provide law enforcement agencies with enhanced powers to investigate, freeze and forfeit bank and building society accounts.

Arguably, these changes are the most significant changes to POCA since it came into force in 2003.

The changes strengthen Part 5 of POCA and enhance the law enforcement agency’s powers of civil recovery.

Account Freezing Orders v Restraint Orders v Property Freezing Orders

The attractiveness of an Account Freezing Order to a law enforcement agency is that it is a cost effective and quick way to freeze accounts holding money and prevent its dissipation.

The requirements for a law enforcement agency to apply for an Account Freezing Order in the Magistrates’ Court are significantly less onerous than applying for a Restraint Order in the Crown Court or applying for a Property Freezing Order in the High Court.

Who Can Apply For An Account Freezing Order?

A number of law enforcement agencies are entitled to apply for an Account Freezing Order including the Police, HM Revenue & Customs (HMRC) and the National Crime Agency (NCA).

How Is An Application Made? | Account Freezing Order Solicitors

The application is usually made by the law enforcement agency on an ex parte basis to a Magistrates’ Court.

This means the subject of an Account Freezing Order application will not be aware of it unless the application is granted and a copy of the Order is formally served on them.

What Are The Requirements For An Account Freezing Order?

In order to grant an application, the Magistrates’ Court will need to be satisfied that:

  • the sum the applicant is seeking to freeze is at least £1,000 being the minimum amount for which an Account Freezing Order can be sought.
  • on the balance of probabilities (civil test), there are reasonable grounds for suspecting that the money is recoverable property or intended for use in unlawful conduct.

Most applications for an Account Freezing Order will be based on the money being recoverable property rather than on the basis that the money will be used in the future for some unlawful conduct.

Recoverable property is defined in Part 5 of POCA as property obtained through unlawful conduct.

Unlawful conduct is effectively any conduct that is unlawful under the criminal law in the UK and where the conduct takes place in the UK or, if the conduct takes place overseas, provided the conduct is also an offence in the overseas territory.

Our Recent Work | Account Freezing Orders

One of our most recent cases involving an Account Freezing and Account Forfeiture application concerned HMRC freezing money in UK bank accounts that had originated from the Far East.

In many cases a law enforcement agency may view what may ostensibly appear to be perfectly legitimate and lawful trading as ‘suspicious’. This can happen where off shore funds are involved (which was the position in the case referred to above) or where there are complicated trading patterns or banking structures which lead the law enforcement agency to conclude that there are reasonable grounds for suspecting that the monies are recoverable property.

It is often the case that the law enforcement agency has either misunderstood the nature of the banking or trading structure or that it has not come across such a structure before and therefore has erroneously decided to label it as ‘suspicious’.

As will be discussed below, reasonable suspicion may well be enough to secure the initial Account Freezing Order but in order to forfeit (confiscate) the money, the law enforcement agency will need to prove its case to the civil standard namely on the balance of probabilities.

How Long Can An Account Freezing Order Last For?

An Account Freezing Order can be made for a maximum of two years. During this period the law enforcement agency can apply for an Account Forfeiture Order otherwise the Account Freezing Order will automatically come to an end on expiry of the two year period.

What Options Are Available To The Respondent?

If you are served with an Account Freezing Order, we will take you through all the available options. We appreciate that in many cases quick, effective and decisive advice is required to protect clients’ interests.

Discharge

One option available to a Respondent is to seek a discharge of the Account Freezing Order at any stage.

We appreciate that corporate entities and individuals may face the significant intrusion and disruption of an Account Freezing Order on the basis of a law enforcement agency’s reasonable suspicion. Often this reasonable suspicion is misplaced and the respondent has a perfectly legitimate explanation to dispel such suspicion.

In such circumstances, we actively engage with the law enforcement agency and provide evidence in support of our client’s case. This may involve adducing expert or accountancy evidence in support to demonstrate that the activity of the respondent is not suspicious but in fact perfectly legal and normal for the sector in which the respondent operates.

We have experience of advising clients on the merits of making a discharge application and provide a critical analysis of the evidence that will need to be adduced in support of such an application.

Variation

In addition, we often apply for variations to the Account Freezing Order to assist our clients.

For example, if a business account has been frozen, an application can be made to vary the scope of the freezing order to enable some of the funds to be utilised or ring fenced.

In addition, we often apply for a variation to enable our client to gain access to living or legal expenses from the frozen funds.

Negotiation

We are experienced in conducting negotiations with all the major law enforcement agencies.

We aim to find an early resolution to all issues and to minimise the disruption to our client and their business that invariably follows from the service of an Account Freezing Order.

Account Forfeiture Order | Civil Recovery Solicitors

Within two years of the Account Freezing Order being granted, the law enforcement agency may apply for an Account Forfeiture Order.

If the law enforcement agency serves Notice of Forfeiture, and the respondent objects to the same within 30 days, the matter will proceed to a full hearing in the Magistrates’ Court.

At the full hearing, both parties present their evidence to the court and importantly, it is for the law enforcement agency to prove on a balance of probabilities that the money is recoverable property.

In order to secure an Account Freezing Order, reasonable suspicion that the money is recoverable property or intended for use in unlawful conduct is sufficient.  In order to obtain an Account Forfeiture Order, reasonable suspicion is not sufficient as the applicant has to prove (to the civil standard) that the money is recoverable property or intended for use in unlawful conduct.

How Can I Prepare For A Forfeiture Hearing? | Civil Recovery Experts

The Forfeiture hearing is, effectively, a trial in a Magistrates’ Court with both parties presenting its case to the court which rules on the matter. There is no jury, the matter is heard by one Magistrate (District Judge) or by a Bench of Magistrates.

We are experienced in preparing cases to challenge the law enforcement agency’s application for a Forfeiture Order.

We understand how the POCA civil recovery regime applies to such cases and we are able to draw on our extensive experience of civil recovery proceedings to assist clients fight Account Freezing and Account Forfeiture cases.

How Can We Help? | Kangs Civil Recovery POCA Solicitors

We are able to field a team of civil and criminal law specialists to assist you. Account Freezing Orders and Account Forfeiture Orders are dealt with in the Magistrates’ Court but in accordance with the civil standard of proof governed by the civil parts of Part 5 POCA.

We can assist you with the following:

  • immediate advice and decisive action if you are served with an Account Freezing Order
  • advice on the proactive steps to be taken to enable your business to continue to operate in the face of an Account Freezing Order
  • seek early engagement with the law enforcement agency to minimise reputational and financial damage
  • advice on the legality of the Account Freezing Order and the scope to seek its immediate discharge
  • advice on whether to consent or object to any further detention application by the law enforcement agency 
  • prepare discharge and variation applications
  • contest final Forfeiture Order applications.

A Reputation Built on Expertise and Trust | Kangs Solicitors

Since 1997, we have been here to assist our clients and to provide positive solutions to whatever issues that may arise for individuals and businesses in new and developing areas of law.

Account Freezing Order applications are increasing in frequency and we remain at the forefront to assist our clients in this fast developing area of civil recovery.

We pride ourselves on instilling a sense of calm in our clients when something as intrusive as an Account Freezing Order is served unexpectedly.

Our frank and forthright advice and, above all, our drive to find practical solutions for our clients, is what is most appreciated by those we have worked with over the years.

How Can I Contact You? | Kangs Solicitors

Hamraj Kang leads an award-winning team of solicitors nationally reputed for its excellence.

We welcome new enquiries by telephone or email.

Our team of lawyers is available to meet at our offices in London, Birmingham or Manchester or, alternatively, we are happy to arrange an initial no obligation meeting via telephone or video conferencing.

For initial enquires please contact:

Hamraj Kang
hkang@kangssolicitors.co.uk
07976 258171 | 020 7936 6396 | 0121 449 9888

Tim Thompson
tthompson@kangssolicitors.co.uk
020 7936 6396 0121 449 9888