This coming April marks three years since the Criminal Finances Act 2017 passed into law in the UK, with the stated aim of cracking down on economic crime and terrorist financing. The act contains a number of powerful new measures, of which Unexplained Wealth Orders are probably the best known. But while UWOs have had far greater media coverage, it is another measure – the Account Freezing Order (AFO) — which has arguably made the greater impact.
Recent UK Government data shows how while just 15 UWOs were issued in the two years to April 2019, a total of 670 AFOs were granted over the same period. AFOs, it is clear, are proving very popular with UK law enforcement. Any potential recipient should know how they work — and what can be done about them.
As their name indicates, an AFO freezes a named UK-based bank or building society account for up to two years, preventing any money in it from being withdrawn. An AFO can be applied for by the usual list of law enforcement agencies: the police, the SFO and the National Crime Agency. But they are also available to a wider, group of bodies, including some government departments; professional regulators such as the FCA, the Prudential Regulation Authority, and the Food Standards Agency; local authorities and even the Post Office and Transport for London.
In order to obtain an AFO the applicant need only show reasonable grounds for suspecting that money held in an account is either recoverable property (property obtained through unlawful conduct), or is intended for use in unlawful conduct. The account holder themselves does not need to be under suspicion, nor does any criminal offense have to have been proved.
Application is made to the Magistrates’ Court (not the High Court as the case with UWOs) and is determined on the civil “balance of probabilities” standard of proof. Applications can be ex-parte if the court agrees that notice may prejudice the future forfeiture of the funds. Once granted, the applying authority has the length of the order to pursue its investigation. At the end of this period (or earlier), it can either accept that the test for forfeiture is not made out or can apply for forfeiture.
Forfeiture happens in one of two ways. The first method is that the enforcement authority gives at least 30 days’ notice of its intention to enforce forfeiture, at the end of which (and if no objection is made) the money in the account is forfeited. The second route is to apply directly to the Magistrates’ Court which will order forfeiture if it is satisfied (again to the civil standard) that the money is recoverable property obtained through unlawful conduct or is intended for use in unlawful conduct.
While the above summary sets out the many attractions of AFOs to enforcement bodies, potential recipients are not powerless. Unlike UWOs, there is no requirement on anyone served with an AFO to explain the source of the frozen funds. They can keep their powder dry until the applicant seeks forfeiture. There is a wide discretion for the court to vary or make exclusions from an AFO, including to enable the carrying on of a trade or business, to meet reasonable living expenses, or to meet legal expenses. It is also possible to apply to the court to vary or set aside the AFO (although the legislation does not specify the basis for doing this).
AFOs are a powerful new weapon in targeting the benefit of crime and have the strong backing of the government and wider law enforcement agencies. They have already been taken up with enthusiasm and I expect applications for AFOs to continue to grow as they are increasingly deployed by a wide range of enforcement agencies.