Account Freezing Orders (AFrO’s) and Account Forfeiture Orders (AFO’s) are wide reaching and can, if granted, significantly impact a party with assets in the UK and the world.
In an ever-changing political climate, it is vital that if you receive an application or court order that you respond and challenge the terms and validity appropriately. We have set out a helpful guide to answer some of the key questions you may have on this subject.
What is an AFrO?
An AFrO is an order granted by the Magistrates Court to freeze a UK bank or building society account with a balance of £1,000 or more. These applications are generally brought by law enforcement agencies (National Crime Agency (NCA), Serious Fraud Office and Her Majesty’s Revenue and Customs) and particularly their criminal investigators who attempt to preserve assets for forfeiture.
Whilst these applications are made in the Magistrates Court the procedure follows a civil standard of proof and therefore the requirement is to prove the allegations on the balance of probabilities.
To apply for such an order there must be reasonable grounds for suspecting that money held in an account is recoverable property (obtained through unlawful conduct) or is intended by any person for use in unlawful conduct.
What is the procedure for obtaining an AFrO?
In many cases AFrO’s originate from a suspicious activity report (SAR) made by your bank and/or building society. A SAR is made to the NCA where it is suspected that your account is being used in connection with criminal activity. Once a SAR is sent to the NCA they have 7 days to respond and thereafter a further 31 calendar days if they request this. During this period a bank and/or building society will freeze your account, all direct debits and standing orders will be stopped, and you will be unable to withdraw any money.
Law enforcement agencies frequently use AFrO’s as they are relatively quick to obtain and cost effective. These orders are usually sought without notice and so you may not be aware that such an order has been applied for until it is granted, and you are served with a copy. Applications are made directly to the Magistrates Court and can be lodged before an investigation has even started. When considering whether to grant such an order the Magistrates should consider; the length of the order sought, the complexity of the investigation, whether there will be overseas enquiries and what proportion of the assets should be seized.
How long can an AFrO remain in force?
An AFrO may remain in force for up to two years.
How can I pay my living and business expenses if my bank account is frozen?
If your bank account is made subject to an AFrO then you are entitled to make an application to the Magistrates Court to vary the AFrO to allow you to meet your reasonable living expenses and carry on any trade, business, profession or even in some cases pay your legal expenses.
What is an AFO?
If having undertaken an investigation the relevant enforcement agency is satisfied that the funds are the proceeds of crime, they will serve (giving at least 30 days’ notice) an account forfeiture notice. During this period, you may raise any objections that this order should be set aside. Where you raise an objection, this will prompt the enforcement agency to make an application for an AFO to forfeit the funds.
An application for an AFO is subject to the same civil standard of proof (on the balance of probabilities) and the enforcement agency must show that the balance held in the account is recoverable property (obtained through unlawful conduct) or is intended by any person for use in unlawful conduct.
What happens if I don’t comply with an AFrO or AFO?
These orders are accompanied by what is known as a “penal” order, which means that a failure to comply with the terms may lead to imprisonment or contempt of court. It is important that you obtain legal advice if you are in any doubt as to the effect of the order or the steps required to comply with it.
Are there likely to be any developments?
AFrO’s and AFOs are at present favoured by agencies and given the current climate we expect these applications to increase, particularly until new legislation is introduced.
If you receive an application for an AFrO or a court order confirming this has been granted, then it is important that you seek independent legal advice. Whether you seek to challenge this or apply to vary the AFrO to allow you to obtain funds for living expenses or continue running your business, it is important you take action quickly.