By Yitong Guo
In the past 6 months, the Litigation team at Lisa’s Law successfully assisted an individual client to challenge two Account Freezing Orders (AFOs) against their personal accounts and have the full seven figure sum released.
Keep reading to learn about the case and how we got the desired outcome for our client.
The background and conduct of the case was relatively straightforward. Earlier in 2022, our client’s various UK bank accounts were subject to AFO applications issued by the police: some were with notice whilst others were not. The time requested for the AFOs to be effective was 6 months with possibility to extend.
We produced evidence and challenged on the facts that the time requested by the application was disproportionate. Our argument was accepted by the court and the valid time of the AFOs were ordered to be 4 months instead of 6 months. Thereafter, we worked hard to prove that our client’s funds were indeed from legitimate sources by going through every transaction that was asked by the police. It was a tedious auditing process.
Proceeds of Crime Act (POCA) and AFO
The AFO was introduced by the Criminal Financial Act 2017. It brought into force new powers under S 303Z1 to 303Z19 of the Proceeds of Crime Act 2002 (POCA). Funds can be frozen for up to 2 years whilst authorities are allowed to investigate.
S 303Z1 provides the definition of AFO as such: (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. (See the Proceeds of Crime Act 2002 )
As suggested, AFO will prevent the accounts in question from operating. The section also provides that the authorities can apply for such an order and the Court will grant the application where there are mere reasonable grounds to suspect that money held in the accounts originates from unlawful conduct or intended for use in unlawful conduct.
The AFO is a civil mechanism to freeze any suspicious assets. Although the application would normally be made by the relevant authorities including regional police forces, the Serious Fraud Office (SFO) and the National Crime Agency (NCA), the burden of proof for granting such orders is ‘not beyond reasonable doubt’ as in the criminal case, but more so on the probability of balance. More significantly, it works as a catch all mechanism to encompass any assets suspected of being used for unlawful conduct.
When compared to other economic restraining methods, for example, the Unexplained Wealth Order (Criminal Finances Act 2017, such order must be made to the High Court, the minimum value held must be in excess of £50,000.00); whilst Restraint Orders (section 41 of POCA, criminal investigation must be underway or there must be reasonable grounds to suspect that an individual has benefitted from criminal conduct).
AFO in comparison is relatively easy for the relevant authorities to satisfy the threshold for the court to grant the application. As a result, since it came into force, AFO became increasingly popular and it is adopted by the relevant authorities to freeze and forfeit funds in the bank accounts in the UK where criminal activity is suspected.
Given the wealth of experience that our team has, we understand the purpose of an AFO and its legal effect. We responded by assisting the client to challenge the police’s allegations against our client’s funds. We first gathered and consolidated evidence rebutting the reasonable grounds of the suspicion in relation to both the source and intended use for the funds. We managed to trace and prove the source of funds and source of wealth. Furthermore, we assisted client in replying to detailed enquiries made by the police.
In the end, the reply and evidence we have supplied were sufficient to satisfy the police’s investigation. After 4 months of investigation, the Police declared the funds to be cleared of suspicion and the full sum in all accounts were released. No forfeiture was made.
In recent years we have seen increasing cases involving AFO which prove to be an effective tool for the authorities. As for individuals or companies who are subject to such applications or orders, you might be asked by the relevant authorities to provide confidential documents on source of funds or be asked to have face-to-face interviews.
Despite this not being a criminal investigation, we strongly recommend that independent legal advice is sought before engaging with the relevant authorities or providing sensitive information which might be incriminating. This is especially the case among individuals who might have considerable amount of cash deposit into their account. There is a possibility that this conduct raises suspicions that the accounts were used as money exchange facility (without regulation) or money laundry, and that the deposit in effect, is likely to be seized as proceeds of crime or unlawful conduct.
The caseworker for this case Yitong Guo (Solicitor); the case is led by Evveline Loh (Litigation Supervisor).
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