What is an AFO?
Account Freezing Orders were introduced by the Criminal Finances Act 2017.
The AFO freezes funds in any financial banking institution. The account holder is prohibited from making withdrawals or payments for a maximum period of two years. It is a civil order made by a magistrates’ court. An AFO can be granted by the magistrate’s court in respect of any account with a credit balance of at least £1,000. Any failure to comply with the terms of the order may result in proceedings for contempt of court that could result in a custodial sentence.
The AFO is a statutory civil cause of action and therefore the process is governed by the Civil Procedure Rules and there is a specific practice direction applicable to civil recovery proceedings.
Legal requirements for making an Account Freezing Order - Reasonable Grounds for Suspecting Under S.303 (2)
The threshold requirement to grant an Account Freezing Order (‘AFO’) is low, it is similar to the requirement to arrest an individual for a criminal offence where there are reasonable grounds to suspect.
Section 303Z3 is relevant:
(2) The relevant court may make the order if satisfied that there are reasonable grounds for suspecting that money held in the account (whether all or part of the credit balance of the account)--
(a) is recoverable property, or
(b) is intended by any person for use in unlawful conduct.
The meaning of suspicion
The court when grating an AFO or when considering an application to set it aside must have regard to whether there are reasonable grounds for suspecting that the money is either recoverable property or that it is intended to be used by any person for use in unlawful conduct.
Lord Devlin’s judgment in the case of Hussein v Chong Fook Kam [1970] AC 942 provides useful guidance on the meaning of suspicion:
Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove’. Suspicion arises at or near the starting point of an investigation, of which the obtaining of prima facie proof is the end. When such proof has been obtained, the police case is complete; it is ready for trial and passes on to its next stage….Suspicion can take account matters that could not be put in evidence at all.
Has the investigator discharged their obligation to establish reasonable grounds to suspect applying for an AFO? This must be carefully investigated and reviewed in each case in any application to set aside the AFO.
Has the investigator provided full disclosure to the magistrates court when apply for the AFO?
The issue of non-disclosure is relevant and there are leading cases related to non-disclosure and the discharge of restraint orders under POCA 2002. This issue is case specific and will need to be carefully reviewed. We were instructed in a case to apply to discharge numerous restraint orders against a company director and his companies. One of the areas that was highlighted in that application was the failure of the investigator to make full and frank disclosure when he applied for the restraint orders ex parte. This line of defence enquiry was crucial and was instrumental in the outcome of the discharge of the restraint orders.
Disclosure is a fundamental duty and requirement on the part of the investigator in ex-parte applications and the following cases highlight this:
Jennings v CPS [2006] 1 W.L.R. 182:
In particular, in an application for a restraint or charging order, the prosecution are under a duty to disclose in the affidavit in support all material facts known to them. If they fail to do this, [that] of itself, in an appropriate case, can be a ground on which an order obtained ex parte may, although I certainly do not say 'shall', be set aside.”
This approach has been generally followed by the court in exercising the jurisdiction given by section 77 of the 1988 Act and analogous and predecessor provisions. Thus the court has imposed a duty on the shoulders of the Crown to make disclosure of material facts, if it seeks a restraint order without notice, just as a claimant in a private civil suit must do if he seeks a freezing order without notice. Now, it is important to recognise the reality of these applications.’
Re Stanford International Bank Ltd [2010[ EWCA Civ 137; [2011] Ch. 33 [Tab 5]
An application for a restraint order is emphatically not a routine matter of form, with the expectation that it will routinely be granted. The fact that the initial application is likely to be forced into a busy list, with very limited time for the judge
to deal with it, is a yet further reason for the obligation of disclosure to be taken very seriously. In effect a prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge. This application is a clear example of the duty either being ignored, or at least simply not being understood.’
Other requirements: international jurisdictions
The investigator will normally clarify that the unlawful conduct is unlawful under criminal law. In relation to international cases where the conduct has occurred outside the UK, the investigator will need to demonstrate whether if such conduct occurred in the UK, would that be unlawful under criminal law. Section 241 (2) of POCA 2002 states:
Section 241(2):
“Conduct which:
(a) occurs in a country or territory outside the United Kingdom
and is unlawful under the criminal law applying in that country
or territory, and
(b) if it occurred in a part of the United Kingdom, would be
unlawful under the criminal law of that part,
is also unlawful conduct.”
Therefore, a careful analysis of the above is required in the case to establish whether the above requirement has been met.
Contact our AFO Defence Solicitors, Leeds, Yorkshire, London, Manchester, Birmingham, UK
We represent professionals, regulated professionals, executives, directors, employees, business owners, high profile and high net worth individuals from Leeds, Bradford, Yorkshire, London, Manchester, Birmingham and all jurisdictions in England and Wales.
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