The NCA announced on Monday 13 January that it has obtained an Account Freezing Order (AFO) over funds in excess of £1m related to businessman Mansoor Mahmood Hussain alleged to be connected to organised crime and in respect of whom the NCA had already secured an Unexplained Wealth Order (UWO) in July 2019. It is clear that law enforcement agencies’ appetite to deploy these draconian orders is growing.
UWOs and AFOs were introduced by the Criminal Finances Act 2017 (in fact, the relevant provisions came into force in February 2018), and are intended to preserve property of suspected criminal origin or intended for use in crime, with a view to such property being forfeited in due course. The former targets specified property and the wealth used to acquire it, the latter targets money in bank and building society accounts. Considerable attention was given to UWOs at the time of their introduction, heralded as they were as “McMafia Orders”.
However, it has transpired that relatively few UWOs have been made, most likely because proceedings in the High Court - the governing jurisdiction - are typically lengthy, complex and costly. At the time of writing we await judgment in the appeal brought by Mrs Hajiyeva against her UWO. As well as deciding her particular case, the Court of Appeal is expected to provide general guidance on the use of UWOs and one can expect that relevant agencies are awaiting that guidance before deciding on a policy for UWOs going forwards. See our related blogs on UWOs here.
The situation with AFOs is very different. Granted by the Magistrates Court, applying the very low threshold of reasonable grounds to suspect, AFOs have been warmly embraced by law enforcement. The common experience of applying for cash detention/forfeiture under the Proceeds of Crime Act 2002 and search warrants under the Police and Criminal Evidence Act 1984 (both of which rely on broadly the same test) means that agencies that are cautious about novel UWOs, such as the police, are not so constrained when it comes to AFOs: input from lawyers is unnecessary and the application procedure is straightforward.
It is thought that many 1000s of AFOs have been made since 2018, affecting hundreds of millions of pounds (the de minimis amount is £1000). The effect of such an order is that the relevant account is rendered inoperable for up to two years, in order to allow an investigation to be conducted into the provenance of the money in the account. Should the applicant agency decide to apply for forfeiture, while in strict legal terms they bear the burden of proof, in practice the account holder will be expected to provide some sort of innocent explanation if there is to be any prospect of avoiding forfeiture.
Prior to an application for forfeiture, challenges to AFOs by way of litigation can be brought in two ways: an application to set aside the order, or contesting an application to extend an order. An alternative route, not available in all cases, is to engage with the relevant investigators and seek to persuade them that the funds in the account are clean and that the order is unnecessary.