Account Freezing Order Success – BSQ secure discharge of £1m Account Freezing Order

Six months after being approached by BSQ client T, BSQ partner Roger Sahota has persuaded the Metropolitan police to voluntarily withdraw their application to freeze various bank accounts belonging to T containing a combined credit balance of approximately £1million.

BSQ’s private client T, a business professional of good character has now been restored access to the funds held in all the accounts in their name.

T was represented by BSQ partner Roger Sahota throughout. Roger represented T at a police station interview and drafted representations to the Metropolitan Police Fraud Investigation Unit that led to the decision to discharge the freezing orders.

The application made against T in an interesting case study in how the Account Freezing Order (“AFO”) powers in the Magistrates Court can often be misused by state agencies and demonstrates the importance of anyone subject to an AFO taking legal advice at the earliest opportunity.

T first learnt that the police had frozen their accounts after receiving a letter in the post stating that the police had applied to the Magistrates Court ex parte (without notifying T) for freezing orders for all their accounts. The orders had been granted and allowed the police to freeze all T’s accounts for 12 months relying on Section 303(Z)(1) of the Proceeds of Crime Act 2002.

In T’s case the AFO’s were applied for on the basis the police claimed that there was “reasonable suspicion” T was involved in money laundering because of the large credit balances in T’s accounts. They did not know how T had come to receive the sums in these accounts. Caselaw provides that the test for an AFO - reasonable grounds for suspecting that money held in an account is recoverable property – is not difficult to establish and the orders were readily granted by the Magistrates.

T then approached BSQ who wrote to the police demanding that the orders be withdrawn voluntarily failing which we would apply to the Court for their discharge and ask the police to pay their costs. Having reviewed the case in light of new evidence filed by BSQ the Metropolitan Police asked the Court to revoke the orders shortly afterwards.

In BSQ’s view the sorry history of this application demonstrates three serious flaws in the POCA AFO regime.

These flow from the Government’s decisions to firstly, give the lower courts the power to grant AFO’s (previously restraint orders covering bank accounts required in the course of a criminal investigation or prosecution could only be dealt with in the Crown Court.)

Second, the Government has deliberately set a very low bar for the grant of an AFO.

Third, the POCA legislation allows applications to be made very easily by the police or state investigators who are not legally qualified.

Compounding the problem is the fact that the law also permits these applications to be made ex parte – without notice to the person affected.

In T’s case a combination of the above factors led a District Judge to grant an ex parte application by a police investigator on the terms requested - with an excessively long return date (12 months) that did not give the person affected a fair opportunity to object or make representations to it.

Best practice dictates that what the Court should have done is grant the ex parte application on a temporary basis – for two weeks for example – and schedule an “on notice” hearing where the person affected could appear and make representations.

This would have also have given time for the Court to have made enquiries of what efforts the police had made to determine how the credit balances in the accounts arose prior to the making of the application.

There is no indication any such issues were raised when the ex parte application was considered in T’s absence.

No criticism is made of the Court’s decision to grant the AFO. But the terms of the freezing order made reflect the problems that can arise when a Lay Bench or (as in this case) a District Judge may not be directed to the relevant provisions by the party making the application and no-one in the courtroom has any specialist knowledge of the complex relevant provisions of the Proceeds of Crime Act 2003 which relate to applications to freeze bank accounts.

Anecdotal evidence from other specialist fraud practitioners suggest that this type of error may not be isolated as AFOs are now routinely applied for on an ex parte basis by police officers and financial investigators.

In BSQ’s experience AFO applications under POCA 2003 are often allocated in the same way as other business in a busy Magistrates Court. To give one example of how POCA applications are listed, BSQ can cite a recent case we were involved in where a police application for an order to detain Bitcoin valued in excess of £10m was listed before a lay bench in a central London Magistrates Court despite defence requests for the case to be assigned before a District Judge. BSQ’s cause was not assisted by submissions from police (represented by Queens Counsel) who (remarkably in our view) foresaw “no problems” with a lay bench dealing with this type of application.

The Extradition Act 2003 provides that extradition cases should only be dealt with by specially designated District Judges. In BSQ’s view it is time legislators reviewed whether a similar approach should be adopted with AFO and other applications under the Proceeds of Crime Act 2003.

It is fortunate for T in this case that BSQ’s intervention helped T secure the discharge of all the orders without T needing to return to court.

However, the problem remains that AFO’s represent a serious abrogation of a citizen’s right to the free and peaceful enjoyment of their property, as guaranteed by the European Convention of Human Rights. It follows that AFO’s should only be granted after proper judicial scrutiny of any application. T’s case demonstrates the current Magistrates Court AFO regime may not always function in practice so as to adequately protect those rights.

Roger has a specialist niche in representing professional clients and companies challenging police applications for Account Freezing Orders and Account Forfeiture Orders as well as Cash Seizure Proceedings governed by the Proceeds of Crime Act 2003. Roger has had considerable success in challenging these applications and is one of the countries leading practitioners in this area.

Read more about our account freezing order solicitors services or if you require advice and assistance in relation to an Account Freezing Order please contact our criminal defence laywers in our London offices. You may also find our briefing by our money laundering defence solicitors of interest.