Account Freezing & Forfeiture Orders

What is an Account Freezing Order?

Account Freezing Orders and Account Forfeiture Orders were introduced by the Criminal Finances Act 2017, which amended the Proceeds Of Crime Act 2002.

They have recently been applied with great enthusiasm by the relevant investigative authorities and law enforcement agencies (HMRC, Serious Fraud Office (SFO), National Crime Agency (NCA), and various police authorities), and experts envisage that thousands of these orders will be secured by the authorities every year.

It is important to understand that such an order is quicker, cheaper and more effective for the authorities than a criminal prosecution for money laundering or obtaining a freezing injunction in the High Court, which are scrutinised intensively.

These orders are generally made ex parte (ie without notice) by the authorities to a Magistrates Court by designated officers working for any of the above-mentioned authorities.

The frozen account must be either a bank or building society account ( the relevant institution must be capable of holding deposits ), and the relevant account must hold a minimum of £1,000.

These are civil proceedings heard in the Magistrates Court (which are generally within the Criminal jurisdiction and are made subject to the often complex Magistrates Court Rules 1981 and The Magistrates’ Courts (Freezing and Forfeiture of Money, Bank and Building Society Rules 2017).

Such an order can be made for a period of up to two years. Generally, we have found that the initial orders are currently being made between 6-12 months; those accounts which have connections with foreign jurisdictions are given a freezing order of 12 months.

Listen > Siobhain Egan speaks more about account freezing orders in this exclusive podcast > Account Freezing Orders – Podcast

Recent Successes and Instructions

1. Siobhain Egan successfully defended an application by HMRC to freeze two accounts in the name of a U.K. businessman (and several x £100,0000) during the first hearing, on the basis that HMRC could not prove any nexus between the monies and an allegation of revenue fraud and tax avoidance.
2. Siobhain also successfully defended two separate sets of account freezing orders in the name of a foreign registered professional and businessman after the Courts refused the applications (the investigating authority re-originated proceedings in another Court (in a different part of the Country!). Those proceedings were also refused by that Court after a successful abuse of process argument was raised.
3. She represented a foreign political dissident, who had in excess of £500,000 frozen upon the basis of breaches of AML rules and procedures and was able to negotiate the return of £400,000 to her client.
4. She advised a U.K. company which had £18 million frozen. A long-established pharmaceutical exporter who had their funds frozen; and several companies and professional partnerships suspected by HMRC of Covid fraud whose business accounts were frozen.
5. Siobhain Egan represented two foreign nationals who found themselves subject to moratorium proceedings brought by the NCA, under POCA 2002. The proceedings involved the freezing of bank accounts and £4.2 million, and civil forfeiture proceedings concerning a large prestigious property were also considered. A full in-depth investigation of the source of the monies (going back to 1994) and the movement of the monies through the international banking system were undertaken to the eventual satisfaction of the NCA and the proceedings were discontinued (May 2023).
6. Siobhain also represented a professional couple who had 4 bank accounts frozen by HMRC and over £250,000 restrained. Again a thorough investigation of the monies including investigations abroad, the process took over 9 months to satisfy the HMRC that the monies and the movement of those monies were legitimate and the freezing orders were overturned (May 2023).
7. Siobhain successfully represented a non U.K. businessman who was the subject of an Account Freezing order brought by HMRC .£1.75 million was frozen , because HMRC suspected that the funds were the proceeds of crime , including the proceeds of sale of cryptocurrency and related assets .

This was a long drawn out set of proceedings , involving documentation and information from many jurisdictions .

We were able to prove that all of the monies were legitimate and after a thorough investigation HMRC capitulated and agreed to withdraw the Account Freezing order and all the monies were returned .

Blogs:

• NCA Seizes Millions From Azeri Politician Under Account Freezing Orders
• Police Freeze Accounts in Suspected Italian Money Laundering Ring
• Gavin Irwin represents Chinese national in application for Account Freezing Orders (‘afros’) by the NCA during the public health emergency
• The rise of Section 22 POCA 2002 – What you need to know.

What is the Test Applied for Account Freezing Orders?

The authorities receive an enormous volume of information about the suspicious movement of monies, either from SAR (Suspicious activity report) made by financial institutions / professional advisers / high-value goods dealers etc.

The relevant ‘ enforcement ‘ officer will make an application to the Court, if they have ‘Reasonable grounds for suspecting that the monies are recoverable property or intended by any person for use in unlawful conduct ‘ These are very broad grounds, and the officer can rely on hearsay statements to the Court.

The Magistrates Court then has to decide, upon the lower Civil standard of proof, the balance of probabilities, whether the monies are either recoverable property (ie obtained through unlawful conduct) or intended for use by persons in unlawful conduct.

What should you do, once you receive notice of an Account Freezing Order or Account Forfeiture notice?

1. If you receive notice of an account freezing order, you should immediately instruct a specialist solicitor, with proven experience in dealing with these orders, white collar crime, financial and corporate crime, POCA (Proceeds of Crime Act), and money laundering. An experienced defence solicitor will be familiar with asset restraint orders and, even more vitally, the Magistrates Courts (which on occasion can be like ‘ the Wild West ‘ and are not for the faint hearted) together with the complex rules which govern those Courts. An experienced defence solicitor will also be familiar with the District Judges and lay Magistrates making these decisions and, perhaps even more importantly, the practice and policy of the investigative authorities such as the NCA, HMRC, SFO and police.
2. If possible, try and open direct correspondence with the ‘ enforcement officer ‘ and prepare any representations (and supporting evidence) that you wish to make regarding the lawful origins of the monies and the lawful purpose of those monies. We have been particularly successful with these types of negotiations and representations and have persuaded HMRC to return £800,000, which they seized.
3. You may wish to make representations concerning a variation of the initial freezing order for living expenses, to continue carrying on trade and reasonable legal expenses. (These representations or an application to the Court for variation of the AFO, can be very difficult – the Courts are quite resistant to these applications and will demand full information and evidence to support such an application). Legal expenses, if granted at all, are only done so upon rates which are much lower than market levels for legal fees. Please note that there is no state funding to defend these proceedings at all.
4. It is imperative to check whether the investigative authorities have not breached or failed to adhere to the strict Service provisions of the relevant Notices and orders. This is very important, and failure to adhere to these Notice provisions can lift an account freezing order completely.
5. You may be an innocent third party with a legitimate interest in those monies, and wish to protect your interests in the frozen monies, vary the freezing order to ensure the return of those monies.
6. Further, it is always possible to cross examine the ‘enforcement officer ‘ at a later stage when the authorities apply to extend the initial freezing order, about the progress of the investigation and test just how diligent s/he has been. Again, we have undertaken such a cross examination recently to great effect; the Court was very sympathetic to our client and granted a very short extension upon the proviso that the officer had to show real progress had been diligently effected in his investigation. These officers are often under resourced and under a great deal of pressure to freeze and forfeit these monies, which go automatically to Central government.

What Happens if the Officer Decides to Forfeit the Monies?

The officer must serve notice of their intention to forfeit the monies upon all affected parties. Again, this is when the Account Forfeiture Notice procedure must be carefully scrutinised.

You would then have 30 days from the day after the notice has been given, to OBJECT to the account forfeiture order, which will result in a full hearing in the Magistrates Court. It may be possible to extend that 30-day period, but you would have to be able to prove good reason in order to do so.

• Can you appeal the decision of the Magistrates Court?
  • Yes and that appeal will be to the local Crown Court and will be a de novo hearing.
• Can you claim compensation if the orders are lifted or you win an appeal?
  • Again the answer is yes, an application would have to be made to the relevant investigating authority

How can Lewis Nedas Law help you?

We have a very experienced, highly regarded (ranked and rated by the Legal 500 and The Times Best Law firms) financial crime team, with years of proven successful experience when dealing with these orders, money laundering, POCA restraint proceedings, High Court freezing orders, bribery and corruption, and all of the National investigative authorities. Our clients are professionals, business owners and high-net-worth individuals.

Additionally, we regularly advise companies seeking advice in order to prevent being affected by such orders and those that have concerns about certain monies in their company bank account.

We work with leading forensic accountants to evidence money trails and the best specialist barristers in this field.

For further information listen to Siobhain Egan’s podcast on this subject > Account Freezing Orders – Podcast

Our Account Freezing Order Defence Lawyers and Civil Asset Forfeiture Defence Lawyers can help you. To speak to one of our solicitors, please telephone us on 020 7387 2032 or complete our online enquiry form.

Related Account Articles

Please find links below to a series of relevant articles by leading barrister Barnaby Hone of Drystone Chambers, with whom we work closely in this area.

1. Reasonable Grounds for Suspecting Under S.303
2. Protecting Third Party interests in both Account Freezing and Forfeiture Orders
3. Length of Time of the Orders
4. Legal Expenses and variations for Living Expenses in Account Freezing Orders
5. Test for an Account Forfeiture Orders – The final test.
6. When is a Bank account not a Bank account under Account Freezing and Forfeiture Orders
7. Account Forfeiture Order Notices – the administrative method.