A short guide to Account Forfeiture

An Account Forfeiture Notice (AFN) or a Forfeiture Order, may (if appropriate) follow an Account Freezing Order (AFO). Please refer to ‘Part 1 – A short guide to Account Freezing Orders’ for further information.

An AFO may be made against a bank or building society account to freeze the funds in that account, preventing withdrawals or payments during a specified period. While the AFO is in effect, the senior officer of the relevant enforcement agency that applied for the AFO may at any time conclude that the funds (which were previously only under suspicion) have now been deemed ‘recoverable’ or ‘intended for use in unlawful conduct’ and therefore are liable to be forfeit. At this point, the senior officer may take the following action:

Account Forfeiture Notice (AFN)

An AFN may be issued as a notice of intention that the funds held in the AFO are likely to be forfeit. The AFN must stipulate the following:

• the proposed amount to be forfeited
• confirmation the senior officer is satisfied that
  • the funds are recoverable, or
  • the funds are intended for use in unlawful conduct
• specify the period of time to object to the AFN
• explain that the funds will be forfeited if the AFN is unopposed in that period.

After the AFN is served, anyone may object to the forfeiture and the objection must be made in writing within 30 days. If an objection is received, the enforcement agency must then (within two working days) apply to extend the AFO, or apply for a Forfeiture Order, or release the funds.

One may apply out of time to the court to set aside the forfeiture. If there are exceptional circumstances for failing to object in the specified period, the court may permit this application. Should the court agree with the applicant objecting to the AFN that the funds should not, in fact, be forfeited, it must set aside that forfeiture and release the funds.

Forfeiture Order

A Forfeiture Order is the formal application of the sum to be forfeited whilst an AFO is still in effect. This application is heard in the Magistrates’ Court and all affected parties must be notified.

The procedure is governed by the Magistrates’ Court (Detention and Forfeiture of Cash) Rules 2002, the Magistrates’ Court (Detention and Forfeiture of Listed Assets) Rules 2017 and the Magistrates’ Court (Freezing and Forfeiture of Money in Bank and Building Society Accounts) Rules 2017.

Like an AFO, a decision on making a Forfeiture Order is also a civil test, yet this is a much higher bar; as opposed to merely citing a suspicion, the senior officer (and thereafter the court) must now be wholly satisfied that the funds are ultimately recoverable or that they are intended for use in unlawful conduct – clearly, a higher burden of proof. (The same higher threshold is also applied when issuing an AFN.) For this reason, it is more common for an AFO to be granted than a Forfeiture Order.

If the funds held in the AFO are ordered to be forfeited, they must be transferred into a nominated account by the senior officer, at which time, the AFO ceases to have effect.

The Forfeiture Order can be appealed while an AFO is still in place, in which case, the AFO will continue to have effect for a short window while that appeal is pending.

Any affected party to the proceedings who is aggrieved by the Forfeiture Order may make an appeal to the Crown Court within 30 days of the decision or order. The court may make any decision on appeal, including ordering the release of whole or part of the funds and interest accrued.

Funds and interest accrued that is ultimately forfeited, will be paid into the Treasury’s Consolidated Fund.

The relevant legislation which governs account forfeiture can be found in s303Z9 – 17 Proceeds of Crime Act 2002, as amended by Chapter 3B Criminal Finances Act 2017.

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If you have any questions regarding any of the issues raised in this article, please do not hesitate to contact our specialist Regulatory Law team by using our online enquiry form or by calling 0330 191 5713.

The article above is Part 2 – A short guide to Account Forfeiture

Account Freezing Orders were explained in our previous article: Part 1 – A short guide to Account Freezing Orders.

Compensation following an Account Freezing Order is explored in our later article: Part 3 – A short guide to Compensation following an Account Freezing Order.