Account Freezing Orders | Account Forfeiture Orders

The Criminal Finances Act 2017 (‘the Act’), which came into operation on 31^st January 2018, introduced additional powers to the Proceeds of Crime Act 2002 which are beneficial to UK enforcement agencies.

These additional powers enable UK law enforcement to freeze and recover the alleged proceeds of crime by way of procedures which take a considerable step towards moving such enforcement into the civil courts.

There are two procedural steps to be taken in respect of seizing funds held in any suspicious account:

• the freezing of its operation
• the forfeiture of the assets held within it.

The Position Prior To The Act 

Over recent years, the number of Suspicious Activity Reports, frequently referred to as ‘SARs’, processed by banks, building societies and other bodies has run into many thousands every year with the result that law enforcement agencies have struggled to deal with the same effectively and make any significant recovery of the substantial amount of the monies held in accounts which seemingly arise from criminal activity and are, therefore, available for forfeiture.

Once any financial institution had suspended any suspicious account, the procedure which had to be followed in order to freeze it and, thereafter, effect forfeiture of the funds within it, by law enforcement was cumbersome and uncertain, normally necessitating a Crown Court being persuaded to restrain the assets or a Confiscation Order being obtained, depending upon the particular circumstances of the case.

Recovery through a civil court was dependent on the enforcement authority deciding to commence recovery proceedings in the High Court and which was dependent upon the monies available for seizure exceeding ten thousand pounds.

The Act

• Section 16 of the Act enables law enforcement, if there are reasonable grounds to believe that money held in a UK bank or building society is recoverable property, to seek an Asset Freezing Order (‘AFO’) in respect of funds held in bank and building society accounts upon application to a Magistrates’ Court.
• Section 16 provides for the following to be inserted into the Proceeds of Crime Act 2002:

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 bank or building society—

(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.

Application For Account Forfeiture Order

Throughout the duration of an AFO, application may be made for an Account Forfeiture

Order (‘Forfeiture Order’).

Once properly served, the recipient party has thirty days, from the day after notice is effectively given, to object.

Upon an objection being received, the matter will be set down for a hearing at which the court will have to decide whether:

• the money which it is sought to forfeit is recoverable property or
• is intended to be used by any person for unlawful conduct.
• the funds should be divided in the event of a claim by a legitimate joint owner of the account.

 Effects Of An Order

If an Order is granted:

• the funds may be transferred to another nominated account,
• the AFO ceases to be of effect, unless there is an application to continue pending an appeal
• an Appeal may be made to the Crown Court within thirty days

If an Order is not granted or an AFO is discharged for any reason, the owner of the account may apply for financial compensation.

How Can Kangs Financial Offences Defence Team Assist You?

It is anticipated that there will be a very substantial volume of applications being made by the enforcement authorities during the next few years reflecting the ever increasing determination to crack down on money laundering and the general movement of funds derived from crimes such as drug dealing.

Certain areas of difficulty and contention have already been identified from a number of applications that have already appeared before the courts such as:

• the nature of the criminality involved
• the effectiveness of service of notice of the proceedings
• upon whom should notice be served
• the source from which the costs of a proposed defence can be derived and the amount.

The team at Kangs Solicitors is highly recognised nationally for its work throughout the field of financial crime at all levels. Our team is ranked in both the leading law directories namely the Legal 500 and Chambers & Partners.

If we can be of assistance in any matter relating to Asset Forfeiture, Restraint Orders, Confiscation Orders under the Proceeds of Crime Act 2002 or any other financial crime issue then please do not hesitate to contact our team through any of the following:

Contact

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

John Veale
jveale@kangssolicitors.co.uk
0121 449 9888 | 020 7936 6396 

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