It has now been nearly three years since section 16 of the Criminal Finances Act 2017 came into force and created Account Freezing and Forfeiture Orders (‘AFFOs’). Since then the number of AFFO applications has been increasing year on year and, with that, law enforcement’s resources are becoming further stretched. An ever-increasing number of applications are suffering from fatal errors in procedure.
Recent experience has shown that where a law enforcement agency fails in its initial application, or has an application to extend an existing AFO refused for a breach of the rules, an attempt may follow from another law enforcement agency or police force to freeze the same funds on the same factual basis.
Given that there is no statutory bar to such an application, what can a Respondent do in those circumstances?
Abuse of Process
A Respondent’s first port of call may well be to make an application to stay the proceedings as an abuse of process.
Section 303Z6 POCA sets out the restrictions on AFFO proceedings and the remedies which may assist a Respondent. That provision allows a court to stay any pending proceedings for an AFFO, or allow them to continue, on any terms the court thinks fit. [See section 303Z6 (1)]
That broad test may invite applications that are made outside of the ordinary, and restricted, grounds on which an application for a stay would be made in criminal cases, although we would expect a court to apply the common law principles governing abuse of process where it would be impossible for a fair hearing to take place or to protect the integrity of the court’s process.
Of course, AFFOs are civil proceedings. However, respondents should be encouraged by the recent decision of the High Court in DPP v. Mansfield [2021] EWHC 2938 (Admin). That authority confirms that Magistrates’ courts in criminal cases are competent to hear, and rule upon, ‘category two’ abuse applications, i.e. where it is said that the court’s sense of propriety and justice is offended by the alleged abuse.
Time Limits / Rules as to Service
Another option for a Respondent is to have the application closely scrutinised to make sure that it complies with the relevant law as to AFFO time limits and that it complies with the relevant rules as to content, notice and service.
The Magistrates’ Courts (Freezing and Forfeiture of Money in Bank and Building Society Accounts) Rules 2017 set out the rules that applicants must follow in relation to the content, service and process of applying for AFFOs. Where those rules are not followed, it may be that a court can be persuaded that an application should fail. With careful and experienced review of cases we are increasingly seeing freezing applications failing for these reasons, particularly in light of the recent decision of the High Court in HMRC v. Mann [2021] EWHC 1182 (Admin). A topic covered by Barnaby Hone in his recent article.
Time Limits
Section 303Z3 (4) provides that an account freezing order may not exceed a period of two years, starting on the day on which the order is (or was) made. This is a strict deadline imposed by the legislation, no doubt in recognition of the necessity of law enforcement’s interference with an individual’s property being proportionate.
Any further application for further freezing of the cash, therefore, should be limited to the ‘global’ limit of two years. For a court to rule otherwise would, in our view, have the result of circumventing the absolute time limits imposed by the legislation and would be wholly unfair on respondents.
Compliance With the Rules
Respondents should ensure that the application served upon them complies with the relevant rules.
For instance, if it is a repeat application, has the applicant disclosed the existence of the previous application as required by Rule 3 (2)? Have all relevant parties been served with notice of the application as required by Rule 3 (3)? (e.g. are there joint account holders who have not been notified?)
If it is an application for an extension, has the application been properly made under Rule 4 (1)? Has the hearing of the extension application been listed more than seven days from the date that notice of the hearing was given by the court and has everyone required to be served a copy of the application/notice of the hearing been properly served as required by Rule 4 (4)?
Conclusions
Despite being heralded as a streamlined and straightforward tool with which law enforcement can seize and forfeit illicit money in the UK, AFFOs are deceptively complex beasts and experience shows us that, despite having three years to get to grips with these powers, the intricacies of the relevant rules and procedures are still not entirely understood by applicants.
Respondents should not hesitate to obtain timely legal advice from counsel with experience of these cases and knowledge of the legislation and rules to advise how these ever-more popular applications can be robustly challenged.
Dan Jones has a specialist practice in civil recovery proceedings under the Proceeds of Crime Act 2002. As well as acting on a private basis for individuals responding to such applications, he is regularly instructed by Her Majesty’s Revenue and Customs, the National Crime Agency and the Metropolitan Police to make applications for the forfeiture of seized cash and money held in bank and building society accounts.
John McNamara is ranked in The Legal 500 2022 for Proceeds of Crime and Asset Forfeiture. He is experienced in defending and prosecuting a range of proceedings arising from the Proceeds of Crime Act 2002 including restraint and confiscation, cash forfeiture, and account freezing and forfeiture hearings.
