Why has my account been frozen?
Your bank may have decided to freeze, suspend, or close your account because of suspicious activity or suspected fraud. Most banks have computerised systems in place for identifying unusual activity on an account, and these systems often make mistakes.
Some banks manually review all automatically generated reports of abnormal or unusual activity, apparently while keeping the account concerned frozen. In our experience, it seems to be widespread practice for the bank not to disclose why the account has been frozen during this internal investigation phase, probably to avoid tipping off (see below).
Your account could also have been frozen by an Account Freezing Order and we have blogged elsewhere on this topic.
How long will my bank account be frozen for?
It is impossible to say how long the bank will take to resolve the issue, although our experience is that it can vary between days on the one hand, and several months on the other, particularly if the case is complex.
Where a bank suspects money laundering, it must make a Suspicious Activity Report (‘SAR’) to the National Crime Agency (‘NCA’). There are statutory deadlines for SARs found in the Proceeds of Crime Act 2002 (‘PoCA’ – see ss. 335 and 336A): Once received, the NCA has seven days to approve the transaction or investigate further – this is known as the ‘notice period’. If the NCA investigates further, it will have 31 days to do so during which your account will remain frozen – this is known as the ‘moratorium’ period. On an application to the Crown Court, the moratorium can be extended in 31-day increments for a maximum of 6 months.
It is an offence (known as ‘tipping off’) for the bank to disclose information likely to prejudice an investigation, so it will not tell you that an SAR has been made.
Tipping off, in combination with the banks’ practice of not disclosing the reasons for a freeze during its internal investigations means that it is impossible to accurately assess whether an SAR has actually been made, and if so, when. Accounts are often frozen in excess of the 38 days (the seven day notice period, plus the 31-day moratorium, i.e.) permitted under PoCA. It is often not until the account holder has received an order extending the moratorium (which the authorities routinely make without notice) that they know the legal basis for the freezing.
What can I do?
Frustratingly, other than cooperating with your bank’s requests for documents and information during its internal investigation, there is no legal process for challenging the banks’ freezing of your account. A solicitor can assist you with communicating with the bank and pointing out statutory deadlines, but the bank will not explain why it has frozen your account or when it will restore your access to it.
You can complain, both to your bank and then the Financial Ombudsman Service about how long it is taking, however this will not solve the immediate problem and unfreeze your account.
It is possible to challenge the extension of the moratorium. If you have received a moratorium extension application or order, please contact Saunders Law’s Crime and Regulatory Department to discuss your options.