Backdoor restraint orders in force since 2018

A new and draconian measure sneaked through as part of the Criminal Finances Act and came into force  in 2018. While all legal eyes have been on the implementation of Unexplained Wealth Orders and the corporate offence of failing to prevent tax evasion, the new power to seize cash in bank and building society accounts  arrived fully formed and without scrutiny.

Whereas previously law enforcement could only restrain bank accounts by going in front of a Crown Court judge and risking judicial interference, notionally at least, the new power enables an enforcement officer to apply ex parte to the Magistrates Court for an account freezing order if there are reasonable grounds for suspecting that money in a bank account is recoverable property (the proceeds of crime) or is intended for use by any person in unlawful conduct.

The power, which is set out in Section 16 of the Act, applies to amounts over £1,000 and has no upper limit, and orders can be made for up to 2 years (yes really).  The court must be satisfied, on the balance of probabilities, that the reasonable grounds can be made out and then it can make the order.  Unlike Restraint Orders, which can only be granted if a criminal investigation has commenced and the prosecution can establish (theoretically at least) that there is a real risk of dissipation, there are no such requirements for an account freezing order to be made. 

The person affected by the order must be given notice and can apply for the order to be varied, or set aside, but to succeed will have to establish that there are no reasonable grounds to suspect the cash in the frozen account is recoverable or to be used in unlawful conduct.  This is likely to prove more difficult than appealing against a Restraint Order.  There is no further appeal against the freezing order, the only remedy is judicial review.

An enforcement officer must be authorised by a senior officer before he can make an application for an account freezing order, and the definition of a senior officer includes the Director General of the Serious Fraud Office.  Once an order has been made a senior officer can then proceed to forfeit the funds in the frozen account, on the same grounds required for the account freezing order to be made.  Presumably, as in cash forfeiture proceedings (which this process closely mirrors) forfeiture will await the outcome of any related criminal investigation, should there be one. The affected person can oppose the forfeiture application, on the same basis for mounting an appeal against the account freezing order.

So faced with a choice between a Restraint Order application in the Crown Court and a visit to the local Magistrates Court, one can guess which route most enforcement officers will take.  And given the level of scrutiny most lay benches give to police applications, one can also guess how most ex-parte applications will pan out.

My guess is that law enforcement will embrace this new power enthusiastically, particularly as it previously put great effort into trying to circumvent the restrain order regime by persuading banks, when dealing with accounts they no longer wish to operate, to issue cheques that could be seized under the case forfeiture provisions of POCA.  This procedure was employed a number of times until deprecated by the courts in the Merida Oil case.

Still there is some good news, as there can be an exclusion for legal fees to challenge the order (isn’t it time for the law in relation to Restraint Orders to be similarly changed), so at least the affected person doesn't  have the embarrassment of casting round for help with legal fees.