Account Freezing Order Guide

An Account Freezing Order (AFO) is a type of a freezing order used by enforcement agencies in the UK to freeze monies held in accounts that are subject of an investigation into suspected criminal activity. This article explains the purpose, application process, legal implications, and consequences for you or your business that has been made subject to an AFO. Our expert team of AFO Solicitors and Barristers have the skills and experience needed to defend our client’s interests.

What is an Account Freezing Order?

An Account Freezing Order (AFO) is a judicial order issued by the Magistrates’ Court to prevent the access or movement of funds, held in an account with a bank or a building society. These orders are typically sought by an application to the court by law enforcement agencies investigating suspected criminal conduct or illicit financial activities including money laundering and terror-financing. AFOs serve to preserve assets pending an investigation and the resolution of legal proceedings and prevent their dissipation or misuse.

Who Can Obtain an Account Freezing Order?

A senior officer of an authorised law enforcement agency, including the Police, HMRC, Serious Fraud Office (SFO), and Accredited Financial Investigators (AFI) may apply to the court for an Account Freezing Order. These agencies have the mandate to freeze assets suspected to be linked to criminal activity or intended for unlawful use. The Proceeds of Crime Act 2002 (POCA) outlines the detailed provisions for obtaining AFOs, specifying the criteria and procedures involved.

How is an Account Freezing Order Obtained?

To obtain an Account Freezing Order, the applicant agency must demonstrate reasonable grounds to suspect that the funds in the account are either recoverable property under the POCA, and has been obtained through unlawful conduct or intended for use in unlawful activities. Each account subject to an AFO must contain funds exceeding £1,000, and the application must be made to a magistrates’ court. The court may grant the order without notice if disclosure would prejudice subsequent forfeiture proceedings.

The application for an AFO is typically made by a senior officer or an authorised officer to a magistrates’ court. The court considers the application and grants the order if satisfied with the grounds presented. The duration of an AFO is specified by the court, not exceeding two years. Once granted, the AFO prohibits the account holder from making withdrawals or payments unless authorised by the court.

How is an Account Freezing Order Granted?

AFOs are granted by a Magistrates’ Court on application by the enforcement agency, and the judge needs only be persuaded that the applicant has reasonable grounds for suspecting that money held in the account in question is either recoverable property under POCA or is intended for use in unlawful conduct.

Importantly, it is the money in the account that is the focus of the AFO application. The account holder does not need to be under suspicion or investigation. Nor does any criminal offence have to have been proved at the time of the application. The AFO applicant needs only to show reasonable grounds to suspect the money may have resulted from criminal behaviour, or that it may – in the future – be used in such behaviour.

What are the Consequences of an Account Freezing Order?

Asset freezing procedures are straightforward, but an AFO can have far-reaching consequences. Upon the issuance of an AFO, the account holder is prohibited from making withdrawals or payments from the frozen account without court authorisation until the expiration date specified in the order. Exclusions may be granted by the court in exceptional circumstances, such as meeting living expenses or legal fees. You may be found in contempt of the court if you fail to comply with an AFO otherwise.

Can I Challenge an Account Freezing Order?

If you are a respondent in an application for an AFO, you have the right to challenge the order by making an application to the Magistrates’ Court for its discharge or variation. You should seek legal advice and representation from solicitors who specialise in Injunction applications to discharge or vary an AFO. The court has wide discretion to vary or make exclusions from a freezing order, which may include the following reason:
1. to enable the carrying on of a trade or business.

2. to meet reasonable living expenses.

3. for payment of legal expenses.

It is important to note, that such an application is likely to require full disclosure of financial circumstances by the applicant.

Equally, a respondent may seek to negotiate directly with the enforcement agency for a variation of an Account Freezing Order by agreement.

It is also possible to persuade a court to set the AFO aside altogether. However, given these applications’ relatively low evidential bar, an AFO recipient may be better advised to treat their account’s freezing as inevitable and focus resources on preparing to resist any later forfeiture application. Robust legal representation is essential in challenging an AFO effectively and safeguarding your interests.

Forfeiture of Funds and Appeals:

Following an AFO, enforcement agencies may apply for forfeiture of the frozen funds. Forfeiture orders may be appealed within 30 days of issuance, with the burden of proof on the appellant to demonstrate the grounds for appeal.
Successful appeals may result in the release of funds or compensation for loss incurred due to the AFO but this depends greatly on the quality of your legal representation.

How long does an AFO last?

Once an Account Freezing Order is granted, the applying authority has the duration of the order, which is usually between 6 to 24 months to pursue its investigation. At the end of this period (or earlier if it wishes), the authority can either accept that the test for forfeiture is not made out and apply to set aside the Account Freezing Order, or it can seek forfeiture.

Is the money in the Frozen Account forfeited automatically?

There are two ways that your funds in the frozen bank/building society account may be forfeited. The first route is the simplest, the enforcement authority gives at least 30 days’ notice to the subject of the freezing order (and anyone else identified as being affected by the order) of its intention to enforce forfeiture. Then, if no objection is made, the money in the account is forfeited. If there is an objection, an application can made to the Magistrates’ Court for a Forfeiture Order.

The second route is to apply directly to the Magistrates’ Court. To successfully make a forfeiture order the court must be satisfied (to the civil ‘on the balance of probabilities’ standard) that the money is either recoverable property obtained through unlawful conduct or is intended for use in unlawful conduct.

Exceptions and Considerations

AFOs do not prevent funds from being paid into the frozen account but restrict withdrawals and payments by the account holder. The court may grant exclusions for specific purposes, such as reasonable living expenses, payment of legal fees, and in the case of a business, to allow it to continue trading providing some flexibility within the constraints of the order. Our specialist lawyers can provide you with expert advice and representation to ensure the protection of your rights and assets.

Our Specialist London Lawyers are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firm’s location adjacent to the Royal Courts of Justice in Central London.

We ensure that we provide the best possible outcome for our clients by conducting in-depth investigations and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense.

Expert Account Freezing Order Solicitors

Account Freezing Orders play a vital role in the investigation and prevention of financial crime. However, they can have significant implications for individuals and businesses subjected to them. Understanding the legal processes involved, exercising your rights, and seeking expert legal assistance are essential steps in defending against AFOs and safeguarding your assets. If you find yourself in need of legal representation for frozen accounts, don’t hesitate to contact our experienced team of Expert Injunction Solicitors. We provide the robust support and representation you need to regain access to your frozen account and provide the best account seizure defense in the UK.

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CASE STUDIES

Case Study: National Crime Agency v Westminster Magistrates Court (2022 EWHC 2631 Admin)

This High Court decision offers hope to those contesting account freezes. In the case of National Crime Agency v Westminster Magistrates Court (2022), Justice Rowena Collins Rice ruled in favor of Ingliston Management Ltd (IML) and Lodge Security Team Ltd (LST), who challenged the freezing of assets belonging to Russian oligarch Petr Olegovich Aven. He was reportedly close to President Putin and had his UK finances frozen in February 2022 on application of the NCA.

Facts in Petr Aven AFO Challenge

In March of 2023, Petr Aven found himself sanctioned by both the European Union and the UK in the wake of escalating tensions surrounding the Russo-Ukraine conflict. On 6 May 2023, the National Crime Agency (NCA) took decisive action by obtaining ex parte account freezing orders (AFOs) against nine UK bank accounts associated with six individuals and companies linked to Aven, despite his absence from holding any UK bank accounts under his own name. This legal maneuver followed a notable transfer of £3.7 million from an Austrian bank account, held by a trust of which Aven was the sole beneficiary, to one of his UK-based companies. The suspicious nature of various transactions, including payments to accounts connected to Aven and his spouse, prompted HSBC, his bank, to flag them.

Subsequent to these developments, Aven’s properties underwent scrutiny, resulting in the seizure of cash. The total sum of £327,800 belonging to Aven was found in the frozen bank accounts. Two of his companies, IML and LST, pursued legal recourse by petitioning the court to set aside or amend the AFOs. In response, the NCA contested this move, contending that altering the AFOs would risk complete asset dissipation, rendering the funds ineligible for forfeiture under the Proceeds of Crime Act 2002 (POCA). Additionally, the NCA argued that Aven possessed alternative means to cover his living expenses beyond the contested accounts. While the district judge declined to revoke the AFOs, they did grant a modification allowing for the utilisation of the accounts to support Aven and his family.

Discontent with this outcome, IML and LST embarked on a judicial review challenge, asserting that the district judge had unlawfully upheld the AFOs. They alleged deficiencies in the NCA’s initial application, citing it as “muddled, misleading, and inadequate,” and accused the agency of failing in its duty of candor. Moreover, they contended that the district judge erred in requiring a change in circumstances as a prerequisite to setting aside an AFO, contrary to the provisions of s.303Z4 POCA.

Judgment: AFO dismissed

The High Court, in its deliberations, refrained from passing judgment on the allegations concerning the NCA’s lack of candour. However, it determined that the requirement for a change in circumstances before setting aside a POCA AFO constituted a legal misinterpretation by the district judge. Mrs. Justice Collins Rice deemed this to be a “clear error of law,” noting the absence of findings and reasons in the application of the test. Thus, the court ruled in favour of IML and LST, highlighting the necessity for strict adherence to legal standards in matters of asset-freezing orders.

Case Study: Hussain & Anor v Secretary of State for the Home Department (2021 EWCA Civ 2781)

Malik Riaz Hussain, a prominent Pakistani property tycoon and owner of Bahria Town, found himself entangled in a legal battle with the National Crime Agency (NCA) after the NCA obtained nine freezing orders under the Proceeds of Crime Act 2002.

Facts in Malik Riaz Hussain AFO Case

On 14 December 2018, an Account Freezing Order (AFO) was granted by the District Judge at Westminster Magistrate’s Court, targeting £19,999,984.27 transferred by Mubashra Ali Malik, wife of Mr. Ali, from her personal account in the UAE to Premier Investments Global Ltd, a BVI registered company owned by Mr. Ali and his wife. Subsequently, on 12 August 2019, the NCA obtained eight additional AFOs related to the accounts of Mr. Ali, his family members, and associated companies, bringing the total frozen sum to approximately £140 million.

Settlement Agreement and Outcome

In response to the NCA’s investigation, Malik Riaz Hussain reached a settlement agreement with the NCA valued at £190 million. This agreement, underpinned by a “Framework Agreement” dated 6 November 2019, stipulated that the frozen funds, including the £50 million mansion, would be returned to the State of Pakistan. The settlement was not an admission of guilt but rather a resolution to the legal dispute. As a result of the settlement agreement, the AFOs were set aside by mutual agreement between Hussain and the NCA.        

Facing an Account Freeze? We Can Help.

Account Freezing Orders (AFOs) are a critical tool for law enforcement, but they can be disruptive for individuals and businesses. Our London law firm combines expertise in both injunctions and litigation to provide the robust support you need.

We understand the complexities of AFOs. Whether you’re under investigation or facing a frozen account, our team of experienced solicitors and barristers can help. We’ll explain the process, consequences, and your rights.

We fight for you. Our skilled team will challenge the AFO, seek its discharge or variation, negotiate with authorities, and advocate on your behalf. We guide you through every step, ensuring your interests are protected.

Don’t face this alone. Contact us today to navigate this challenging situation and secure the best possible outcome.