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ACCOUNT FREEZING ORDERS UK
Freezing injunctions are most commonly sought by an Applicant when it believes it is the victim of some kind of fraud. When this happens, an Applicant often goes to Court without any notice to the Defendant and applies for a freezing order against the Defendant. It then serves the Defendant with the freezing order and the Defendant is then “on notice” that it should not try and remove its assets beyond the reach of the Claimant until the underlying claim is either settled or resolved at Court.
It is important for any Applicant to understand that a Defendant may still try and remove assets beyond the reach of the Applicant despite being served with a freezing order. However, to do so is extremely unwise as breaching the terms of a freezing order is a “contempt of Court” and can lead to the imprisonment of a Defendant who knowingly breaches the terms of the order. Because of this threat of imprisonment, the freezing order remedy is a powerful one and it is rare for a Defendant to ignore or breach the terms of the Court January 2023 marks six years since Account Freezing Orders (AFOs) came into effect under the Criminal Finances Act 2017. These orders allow the state to freeze money in bank and building society accounts it considers to be criminally tainted, and then apply for this money to be forfeited.
AFOs are quick and relatively easy for enforcement agencies to obtain. They are, as a result, popular. The financial year 2021/22 saw the SFO, HMRC, NCA and the country’s police forces together issue a total of 1,100 AFOs.
Often the first time the holder of a bank account knows it has been hit by an AFO is when they try to use their bank card and find they cannot access their money. There then follows the difficult experience of trying to establish what has happened, while simultaneously trying to secure access to funds necessary for a normal life.
But all is by no mean lost for the holders of AFO-targeted accounts. There are various techniques by which AFOs and their associated forfeiture orders can be successfully challenged. There are also innovative ways in which targeted account holders can achieve strategic victories in the face of what may, at first, seem overwhelming odds.
Account Freezing Law UK
Account Freezing explained
The Criminal Finances Act 2017 (‘The Act’), amending the Proceeds of Crime Act 2002, introduced Account Freezing Orders into law. The Act gives Magistrates’ courts the power to order funds of more than £1,000 in a bank or building society account to be frozen for up to two years.
To approve the order, the court must be satisfied that there are reasonable grounds for suspecting the money held within the targeted account is recoverable property (i.e., the proceeds of crime) or intended for use in unlawful conduct.
AFOs are a civil law procedure concerned only with the money in the relevant account(s). As such the Magistrates court must only be convinced of the applying authorities’ claims to the civil standard of proof (the balance of probabilities) rather than the more stringent criminal standard (beyond reasonable doubt).
An AFO is granted for a set period, during which an enforcement officer should undertake an investigation to establish whether there is enough evidence to support their initial suspicion.
Before this period has expired, the enforcement officer can either accept that there is not enough evidence to satisfy the test for forfeiture (and apply for the AFO to be set aside), or they can seek forfeiture of the funds.
Forfeiture is made in one of two ways: either a notice of forfeiture is given to the interested parties, to which they must make an objection within 30 days; or the officer applies directly to the Magistrates’ court to make a forfeiture order.
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