A restraint order is an order of the crown court prohibiting any person (individual or company) from dealing with property they hold, or have an interest in. The purpose of a restraint order is to freeze property that may subsequently be confiscated following prosecution and conviction of a criminal offence. Confiscation is the power the court has to make orders depriving convicted offenders of their available assets if the offender has benefited from his criminal conduct.
A restraint order tells the person subject to it that he/she cannot ‘deal’ with the property cited in the order. Restraint orders can prevent dealing with specific assets. If the order mentions your car for example, it will mean that you cannot sell the car or transfer it or dispose of it, or in any way ‘realise’ it, i.e. turn it into cash. Or they can be an ‘all assets order’, in which case there is a blanket prohibition on dealing with any assets, whether or not they are specified in the order. This includes assets held anywhere in the world.
If a person, or a third person with knowledge of the order, deals with the property in breach of the order they will be in contempt of court which means they may face a fine or imprisonment.
Could you become the subject of a restraint order?
A judge in a crown court may make a restraint order if an investigator (for example the police or FCA) makes an application under section 40 of the Proceeds of Crime Act 2002 (POCA).
Such orders usually come early in a case and often before an arrest – as long as a criminal ‘investigation’ has started, s40(2)(a). The application is made ex parte – i.e. without notice to the suspect, so the only lawyer at court is for the prosecution.
Often, the first a person will know about an order being made is when he or she is served with the order, or even finds that his or her cash-card for some reason no longer works. Restraint orders can also affect third parties A spouse for instance, may often become subject to a restraint order where property is jointly held , but where their partner is under investigation.
If you know there is an investigation against you in respect of an offence for which you have received financial benefit there is a risk that an order will be made at any time. If you are able to make representations in advance of the order being made you may be able to influence the scope of the order, or provide sufficient assurance to the investigator in the form of an undertaking to avoid one being made all together.
What can you do if you are subject of a restraint order?
It is important to get advice from a solicitor as soon as possible when you are served with a restraint order. The immediate effect of a restraint order can be to leave an individual without access to funds that are required to pay bills or keep a business running. A standard term of a restraint order is to permit the release of a small sum of money (commonly £250/week) which the affected person can draw, often in cash by arrangement with the bank, to live on. This can be varied to permit more essential outgoings, but requires negotiation with the other side, or persuading the court.
As the order is often made without the presence of the affected party, it is important that it is carefully reviewed. You may be:
•required to make full disclosure of all your assets within a relatively short space of time;
•able to argue for an increase in the allowance to meet your everyday living expenses and/or expenses to enable you to carry on a trade, business, profession or occupation. (Please note, variations to a restraint order cannot be made to permit payment for legal expenses relating to the offence in relation to which the restraint order is made);
Required to repatriate assets held overseas;
•able to challenge the scope of the order. There is no necessity to keep any more in the pot than may be required to satisfy a confiscation order; or
•able to challenge the validity of the order.
If you have had your bank account frozen or you have been served with a restraint order, we suggest that you seek urgent legal advice.
Sperrin Law has considerable expertise in advising on all aspects of restraint orders. Restraint orders can remain in place for months, or in some cases even years, so it is important to ensure that everything is done to minimise the detrimental impact they have on day to day living, and the running of business. Please email us at email@example.com or call us on 0203 666 5155 to discuss how we can help.
More and more we are being contacted by both individuals and companies who have had access to the funds in their bank or building society account(s) unexpectedly denied. In some cases, the funds will have simply disappeared from the account and calls to the Customer Services, or Complaints departments are usually met with a standard response that there is an administrative issue, which is being looked into. But no proper explanation is given about what to do, or what is going on, or for how long and the customer is left feeling helpless.
If this sounds familiar, it is possible that you have been made the subject of a Suspicious Activity Report (SAR). The SAR regime was designed to help law enforcement, and specifically the National Crime Agency (NCA) identify individuals, groups and organisations potentially involved in criminal conduct.
Unfortunately, many innocent people are being caught by this regime. Statistics show that financial institutions are filing high volumes of low-quality defensive SARs and 470,000 reports were made in the last year alone. Quite a large percentage of those were made against innocent customers making perfectly legitimate transactions.
SARs are often triggered as a result of unusual credits or debits, especially cash deposits, particularly those that may appear to be ‘smurfing’ i.e. where several deposits of cash are made, in s short space of time, but are under the threshold for amounts that might attract attention if paid in one deposit. Cash deposits that appear to be ‘smurfed’ are generally perceived to be money laundering. Transactions with high risk jurisdictions, or of an unusually high value, or those which appear to be inconsistent with the normal operation of an account can also trigger a SAR. We have also come across cases where people have had their accounts frozen by their bank, as a result of activity of online fraudsters.
How long will it take for your account to be unfrozen:
If your account is under review for suspicious activity, the financial institution cannot give you a reason as to why it has denied access to the funds, hence lack of information, or excuses made to customers. This is because the bank itself, or persons within it, may be committing the criminal offence of ‘tipping off’. Frustratingly, you will have to wait for the National Crime Agency (NCA) to carry out a review of the disclosure.
The NCA has 7 working days, starting with the day after the SAR was made, to either give consent for the transaction to continue, which in practice then means the bank or building society allowing its customer to access their account and funds. Or refuse consent, in which case a further ‘moratorium’ period is triggered. This allows the NCA a further 31 calendar days to decide what to do. However, the NCA also has the power to apply to the court for extensions of the moratorium period, up to a maximum of 6 months.
Until such time as the bank is given the all clear by the NCA (known as appropriate consent), you will not be able to access your bank account and it will be effectively frozen by the financial institution, with the whole credit balance often being moved into an internal bank, or building society Treasury account for safe keeping.
The consequences of a SAR being made, can result in the disclosure being referred by the NCA to other law enforcement, whether that is the police, or HM Revenue & Customs etc. which may then commence a criminal investigation and apply to the court for a separate freezing order (see our article on Restraint Orders for more information).
It can be a desperate time for people and business owners to find they have no access to their money.
A typical example is as follows:
Suzy earns £62,000 per year and has a bank account at one of the well-known high street banks. Suzy receives £280,500 into her account from the Turkish Republic of Northern Cyprus. The bank’s computer has an algorithm designed to spot any transactions that are unusual or suspicious. An alarm bell rings, and the transaction is brought to the attention of the bank’s Nominated Officer – let’s call him Bryan.
Bryan looks at the information and has concerns that the activity is suspicious, i.e. he suspects money laundering. He files an electronic SAR with the NCA. Dave presses a button on the bank’s computer system and the account(s) are frozen.
As previously explained, Bryan has done this because the Nominated Officer is obliged to report any suspicious activity to the NCA. If he does not, he may commit a criminal offence.
Following the accounts being frozen, Suzy tries to pay for her food shopping. Her card doesn’t work. Suzy leaves the supermarket and calls her bank to ask what is going on. She knows her account is in funds; she had just recently received a large sum of money from the proceeds of a property sale.
The NCA will review the SAR relating to Suzy and cross-reference it with existing information. It may refer the information to a law enforcement agency to investigate further. Alternatively, it might determine no further action is necessary. The NCA can authorise the bank to lift the freeze within days and sometimes within hours, but this is not always the case.
If the NCA determine that Suzy’s banking activity is suspicious, her account will remain frozen whilst the NCA decides what to do, which could involve law enforcement starting a criminal investigation. It may simply result in the bank or building society being given appropriate consent and in which case, access to the account would be restored. If the accounts are eventually unfrozen, it is likely the bank will offer no explanation.
There may also be the possibility that your account(s) will become subject to a Restraint Order. This is where a prosecuting authority has obtained an order from the court preventing your assets from being disposed of pending the outcome of a criminal investigation and possibly, prosecution.
What are your options?
Your legal options during this period are very limited but in view of the potential for the matter to develop into a criminal investigation and a Restraint Order, or an Account Freezing Order (see our article here), it is worthwhile seeking early legal advice so you know what to expect.
Please note, there must be strong evidence to establish the possibility of ‘financial ruin’ for the court to be persuaded to grant such relief.
Should I take legal advice?
In short, yes. If you have had your bank account frozen, we suggest that you seek urgent legal advice. Please email us at firstname.lastname@example.org or call us on 0203 666 5155 to discuss how we can help.
Kelsey is an associate at Sperrin Law. She has extensive experience of regulatory investigations, including those brought by the SFO, NCA and FCA. She has worked on cases involving LIBOR manipulation, tax evasion and Sign-On Fraud.
Following a twenty-one week trial at Wood Green Crown Court, Sperrin Law’s Crime Team secured the acquittal of Anita Chapman, the director of a diesel and biodiesel supplier. She along with six others, faced charges brought by the Crown Prosecution Service (CPS) as part of a long-running investigation. A jury at Wood Green Crown Court unanimously acquitted her of all counts. Sperrin Law’s Crime Team was led by Managing Partner and joint Head of Department Patrick Dorrian and Associate Kelsey Sinclair.
Following agreement by both Houses on the text of the Bill, The Criminal Finances Act 2017, received Royal Assent on 27 April 2017.
You may now view the text of the act at legislation.gov.uk, which was published on 5 May 2017.
The following provisions contained within the Criminal Finances Act will be of particular interest to financial services practitioners: (more…)