How can I get compensation after an Account Freezing or Forfeiture Order?

It is possible for a person who has successfully applied to set aside an Account Freezing Order, or dismiss an application for an Account Forfeiture Order, to apply for compensation.

What is an Account Freezing Order?

Account Freezing and Forfeiture Orders are being used increasingly by law enforcement,[1] following their introduction under the Criminal Finances Act 2017 (which amended the Proceeds of Crime Act 2002 – ‘PoCA’). PoCA allows the Courts to freeze bank accounts where there are reasonable grounds for suspecting that the money in the account is ‘recoverable property’ or ‘intended for use in unlawful conduct’.[2] Once money is frozen, the authorities can then apply for that money to be forfeited – if they can satisfy the Court that the money held by the account is, in fact, recoverable.

Can I get compensation if none of my money is forfeited?

If the Account Freezing Order is set aside (comes to an end, i.e.), without any of the money in the frozen account being forfeited, then it is possible to apply for compensation.[3] The fact that no money is forfeited pursuant to a Freezing / Forfeiture Order is crucial – even if only a fraction of the frozen funds are forfeited, then the right to seek compensation is effectively barred.

If the person applying for compensation has suffered a loss because of the AFO being made, and the circumstances are exceptional, then the Court may order compensation. This wording means that an award of compensation is made at the Court’s discretion – “the Court may order compensation”.

‘Exceptional circumstances’ are not defined in PoCA, or in the procedure rules for AFOs. Examples of exceptional circumstances might be a failure to conduct the frozen account investigation diligently and expeditiously – basically, where there has been a long and unjustifiable delay on the part of the authorities. In the absence of exceptional circumstances, you are unlikely to get compensation. The facts of each case will be different, so this is where legal advice becomes invaluable.

How much compensation will I get?

There is no fixed sum for compensation. The Court will consider the amount of loss you have suffered, and whether this was caused by the AFO.

Can I recover the costs of opposing an Account Freezing Order

Firstly, what is the difference between ‘costs’ and ‘compensation’? Compensation is money you are awarded in recompense for the loss caused by the AFO – as explained above. Your costs are what you spend on arguing your case – legal fees, i.e.

The starting point[4] in AFO cases is that there should be no order as to costs, meaning that each party bears their own costs in the case. Put another way, you will not get back the money you spent on arguing your case.

However, where there has been unreasonable conduct on the part of the authorities, then you may be able to argue that the Court should depart from the starting point and request that you are awarded your costs. Specialist legal advice on this issue will be crucial.

If your account has been made subject to an Account Freezing Order, or you are a person affected by such an order, contact the author of this blog Tom Airey in our Crime and Regulatory Department on [email protected] or 020 7632 4300 to discuss your options.

[1] https://www.gov.uk/government/statistics/asset-recovery-statistical-bulletin-financial-years-ending-2016-to-2021/asset-recovery-statistical-bulletin-financial-years-ending-2016-to-2021

[2] Part 5, Chapter 3B, PoCA.

[3] Under s. 303Z18, POCA.

[4] See R (oao) Perinpanathan.