When the footballer Mario Balotelli’s house was on fire, the first person he called was his agent. Who, quite predictably, told him to phone the fire brigade. As an immigration lawyer I have received less dramatic phone calls. Yet the story resonates with me.

For those we help to enter and stay in the UK, we may be their only legal contact. When issues arise, they come to you. Often the role is simply one of signposting: competent accountants, financial advisors and estate agents. In some instances, there will be a Balotelli-level emergency and your role will be more hands-on. Divorce, imprisonment of a family member and care proceedings are common examples.

This article will explore what to do when your client’s bank accounts are frozen using an account freezing order (“AFO”). It will briefly look at what they are, why they matter to immigration practitioners and how you can help.  As we will see, practitioners can take a couple of small steps that can make a meaningful impact.

What are Account Freezing Orders?

The Criminal Finances Act 2017 brought in an array of civil law tools to make law enforcements’ job of freezing and recouping the proceeds of crime easier.  The flagship of this Act was the unexplained wealth order, commonly known as the “McMafia Order”. While unexplained wealth orders have been less successful than some had hoped, Account Freezing Orders have become a prominent and commonly used tool. The anti-corruption charity Spotlight on Corruption dubbed them as “law enforcement’s ace of spades”.

An Account Freezing Order is a tool to preserve the balance of an account while investigations are on-going. It prohibits named persons from making withdrawals or payments from an account with a balance of £1,000 or more. They can be used by various law enforcement agencies, including the police, the National Crime Agency, the Serious Fraud Office and Her Majesty’s Revenue and Customs. 

The evidential threshold for getting an Account Freezing Order is low. An enforcement officer has to show they have “reasonable grounds to suspect” that all or part of the money held in that account is either: (a) property obtained through unlawful conduct; or (b) intended by any person for use in unlawful conduct. The enforcement officer will more often than not produce a pre-prepared statement that outlines the alleged conduct and why they say the threshold is met.

Applications are made in the magistrates’ court and usually without notice to those concerned. An order can freeze an account for up to two years, during which the relevant authority can conduct its investigation and decide whether to seek forfeiture. The court can vary an Account Freezing Order on application and can allow exceptions for reasonable living expenses or to carry out a business or occupation. 

Account Freezing Orders are a low-risk to those who use them. Where they are challenged or overturned, costs are only awarded in limited circumstances. It needs to be shown that the authority acted unreasonably or improperly, which is often hard to prove. 

Why do Account Freezing Orders matter to an immigration practitioner?

Account Freezing Orders are used by an array of agencies and at an increasing pace. Their coverage by the press often involves those who have come to the UK from elsewhere. Those targeted by Account Freezing Orders are not limited to the super-wealthy, politically exposed, or oligarchs. In 2019, for example, around £3.6mn held in 100 bank accounts belonging to mainly Chinese students were frozen using Account Freezing Orders. At the time, the National Crime Agency believed the accounts were being used for money laundering. However, commenting on these cases, Katy Thorne QC said“These young people have become targets because their families use hawala to send them money from China”.

What about the numbers? Taking HMRC as an example, the department has frozen around £56mn since 2017. Of all the applications it makes to the court, 95% are granted. The number of applications by HMRC have grown from 60 in the tax year 2018-2019 to 166 in 2019-2020. The Department has also seen a 712% increase of money confiscated in the year 2021-2022 through account forfeiture orders, supported by Account Freezing Orders. According to Home Office statistics (which includes cases brought by the National Crime Agency), £209mn was seized following an Account Freezing Order in the financial year of 2019-2020 and £99mn in 2020-2021.

With the invasion of Ukraine and tighter regulation, there is also a greater willingness for banks and financial institutions to submit suspicious activity reports. This will undoubtedly lead to Account Freezing Orders for those seeking to bring money into the UK from higher risk jurisdictions. Recouping the huge losses from Covid fraud is also likely to lead to HMRC making greater use of this tool. 

How can you help?

The phone rings and a familiar but distressed voice is on the line. What can you do? Having the details of a competent criminal solicitor is a start. Beyond this, there are three steps an immigration practitioner can take to support their client.

Reasonable living expenses: Meeting the Immigration Rules and requirements

Account Freezing Orders can last up to two years, which is a significant period in immigration terms. On occasion, the Account Freezing Order is the start of the longer process of forfeiture. This may take several years depending on the complexity of the underlying issues and the course of investigations. During this time, their visas may be due to expire. They may need to show a sum of maintenance for themselves or those they sponsor. 

For the purpose of calculating “reasonable living expenses”, you may wish to identify the costs associated with applying for extensions of visas and meeting the relevant Immigration Rules. In some cases, the living costs granted by the court may well-exceed the threshold under the Rules. But a clear repertoire of the anticipated visa applications, their cost, and the available funds necessary to remain in the UK is a helpful document to have.

To this end, it is also vital to have a copy of the Account Freezing Order that permits the use of the funds in order to present to the Home Office. Without it the decision-maker may be acting on limited information and refuse the application on the grounds that one or more accounts are frozen without exception. This is much harder to unpick post-decision – more so when your client is limited in the funds they have to pay. 

Tempering expectations

Though Account Freezing Orders are a civil tool, the Home Office may feel that the underlying conduct needs to be considered before a decision is made as to whether to curtail or grant leave. This will take time. It will be important to flag the possibility of delay of an immigration application from the outset. It also raises the prospect of a previously unanticipated adverse immigration decision.

Settlements: guidance on the consequences

Those subject to Account Freezing Orders often settle. This usually involves payment of a sum to the authorities. When this does happen, clients may assume that this is the end of things and they can resume their lives as before. However, the Home Office may have other plans and take action to curtail their pre-existing status or refuse future applications. Such an issue was aired last year in Hussain & Riaz v SSHD [2021] EWCA Civ 2781. 

The National Crime Agency were granted Account Freezing Orders over bank accounts with a combined balance of £140mn. They belonged to family members and companies associated with Pakistani businessperson Malik Riaz Hussain. In 2019, a settlement was reached for £190mn. The sum was paid to an account belonging to the Supreme Court of Pakistan (§50 of the judgment)

Malik Riaz held a multi-entry visit visa. As did Ahmed Ali Riaz, whose bank account the Home Office said was subject to an Account Freezing Order (§15).  Shortly after the settlement, the Home Office cancelled the visas on the basis that their exclusion from the UK was conducive to the public good. It was alleged that they had been “…involved with corruption and financial/commercial misconduct” (§4). The decision letters are set out at §§14-15 of the judgment which provide the Home Office’s reasons in full. For our purposes, however, it is important to note one of the reasons for the Home Office reaching this conclusion:

The subsequent settlement made between the NCA and your family. In particular, that the settlement was voluntary and substantial and that your family’s agreement to pay towards the outstanding amounts owed under Supreme Court order in the judgement dated (21/03/2019) draws a direct connection between your family, yourself and the Supreme Court judgment against the company.

They challenged this finding in the Upper Tribunal in the judicial review claim that followed. Dismissing this ground, Judge Kebede held that (see §50 of the Court of Appeal judgment):

… the respondent was clearly entitled to have regard to the fact that the freezing orders were only set aside because the applicants agreed to pay a substantial amount of money, to the amount of £190 Million, to an account held by the Supreme Court of Pakistan in part-payment of the amount ordered in the Supreme Court judgment.

This was upheld on appeal. At §84, Lady Justice Nicola Davies found:

It is also of relevance, as stated by the decisionmaker, that the NCA proceedings were voluntarily settled, the settlement was underpinned by a Framework Agreement made between the NCA and Mr Ali. The fact that the AFOs were set aside does not undermine their significance because that was done only as a result of an agreement, the result of which was the entirety of the funds subject to the AFOs would be returned to the State of Pakistan.

Though each Account Freezing Order and its consequences will be unique, there are three important take-aways from the Hussain case:

• You should have sight of the documents underlying the Account Freezing Order at the earliest possible stage, particularly the grounds for suspicion that set out the enforcement officer’s reasons. The underlying factual basis should be interrogated and the client advised of likely points that may lead to curtailment or affect future applications.

• Where possible, efforts should be made to ensure that the terms of settlement include elements that protect your client’s immigration position. On occasion, the underlying reasons for the Account Freezing Order may remain untested and settlement may be taken as accepting them in whole or in part. Judicial review is not the appropriate forum to be trying to untangle any consequences that may arise. 

• Prepare for the worst: position your client for a possible appeal and/or judicial review.

Conclusions

Account Freezing Orders are only growing in popularity among law enforcement authorities. Though on first blush it may appear to be outside an immigration practitioner’s ambit, our involvement can be effective and important. I hope this article has given you a brief outline of Account Freezing Orders and how you might help. If you only read the first sentence and this conclusion, you know what to tell your client when their house is on fire.