Challenging Account Freezing Orders
BSQ partner Roger Sahota has been instructed in many of the first cases brought under the new account freezing order (“AFO”) provisions which came into effect in April 2018. Here, Roger examines how the new law works and what can be done to challenge these new orders.
‘It is inevitably a shock to anyone when they find out that their bank account has been frozen. Normally, the first time my clients learn of this is when they receive a letter from the police. This will include a court order which the authorities may have obtained ex parte – in secret - at a Magistrate’s Court. The consequences of the order could mean that they may no longer have access to their only means of financial support. Quite understandably they want to take urgent legal advice”.
AFO’s are very easy to obtain, Roger explains. “The authorities do not need to prove that you are accused or suspected of being involved in criminal behaviour. All they need to show to the Magistrate is that they have reasonable grounds to suspect that money held with a bank in a value over £1,000 is the proceeds of unlawful conduct. The Court will then grant an order which freezes the account and allows the police to further investigate the case for up to 2 years until a final hearing where an application for the funds to be forfeited can be made. During that time, the police will have to apply every six months for the order to be renewed’.
Roger’s recent experience suggest that the test for obtaining an AFO is extremely low. In one case he is involved in Magistrates granted an AFO on the basis of BBC news articles culled from the internet that were two years old. They reported how a close relative of his client had been prosecuted in another country on corruption charges. “There was no suggestion in that case that my client was involved in serious crime or corruption but the Magistrates still granted the order,” he says.
“Anyone may subject to an AFO should not be left destitute however. The law allows for anyone affected to apply for funding from a frozen account for their living and legal expenses while the AFO remains in force.”
But, while obtaining an AFO to investigate maybe straightforward, persuading a court that money is held in a bank account should be forfeited is more difficult he argues.
‘To persuade a court that the money should be forfeited, the burden of proof is on the authorities to show that the balance held in the account is derived from criminal conduct.”
Given the sums often involved can run into credit balances in the millions Roger believes “forfeiture applications will be hard fought.” He says “I am currently helping clients in a number of cases to show that the credit balances in their accounts are of a lawful origin and does not represent the proceeds of crime.”
“We are testing the boundaries of the new law. The burden is on the state to show the money in an account represents the proceeds of criminal activity. It is not for our clients to prove anything.’
Looking forward, Roger expects AFO’s to be widely used in coming years.
“The AFO is a nuclear weapon in a fraud investigators arsenal. The authorities can now apply for freezing orders without having to jump through all the hoops and obstacles associated with obtaining restraint orders. They can target individuals who are not suspected of criminal offending themselves but are believed to hold “dirty” money.”
State agencies have a big incentive to secure forfeiture orders he points out. “A proportion of any money in an account that is forfeited will be given to the law enforcement agency seeking the order. This is as part of the Home Office asset recycling program. We have seen how this has been a powerful incentive for the police and other state bodies to pursue confiscation orders and I expect the same to apply with AFOs”
He suggests that many AFO’s will be applied for after the police receive money laundering reports from a bank. “Many thousands of suspicious activity reports are made by the banks every year. In the past most were not acted on by the authorities. AFO’s are a new and simple tool they can use to obtain freezing orders while they carry out enquiries.’
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