Amount seized in forfeiture orders jumps 77% to £191m in past year
Controversial orders obtained by HMRC, the National Crime Agency and the Serious Fraud Office make it easy for authorities to seize money
Risk that allowing enforcement agencies to keep share of proceeds seized may act as an incentive
The amount of money seized by UK law enforcement agencies, including His Majesty's Revenue and Customs (HMRC), the Serious Fraud Office (SFO) and the National Crime Agency (NCA), has jumped 77% from £108m to £191m in the last year*, says international law firm RPC.
Adam Craggs, Partner and Head of the Tax, Financial Crime and Regulatory team at RPC, says law enforcement agencies are increasingly using powers to freeze and confiscate assets which require little judicial oversight.
Account Freezing Orders (AFrOs) are increasingly being used by enforcement agencies to freeze UK bank or building society accounts and are granted by the Magistrates Court. They do not require authorisation by a senior judge, or indeed a qualified lawyer. Agencies can use AFrOs to prevent money from being accessed if they believe this might be linked to criminal activity, even before an investigation has taken place. They can apply to accounts with balances of just £1,000 and enable authorities to preserve funds for subsequent forfeiture.
If the authority is satisfied that the funds are the proceeds of crime, they can then serve an Account Forfeiture Notice to seize the money without any judicial oversight or apply to the Court for an Account Forfeiture Order.
Adam Craggs says: “AFrOs are controversial as an application, for such an order can be made before an investigation has even begun and the agency is only required to prove the allegations on the balance of probabilities, rather than the higher criminal standard of beyond reasonable doubt.
“Given the low thresholds for obtaining these orders it’s concerning that they are being used so liberally.”
The amount seized through account forfeiture as a percentage of all confiscations and civil recovery orders, has increased from 20% of all money seized in 2016-17 to 54% in 2021-22.
RPC says the Asset Recovery Incentivisation Scheme, whose objective is to provide law enforcement agencies with financial incentives to pursue asset recovery by allowing them to keep some of the money forfeited, may be another reason why the amount of money seized has increased in recent years.
Alice Kemp, Senior Associate and Employed Barrister at RPC, says that challenging an AFrO in court can be time-consuming and in some cases requires expert evidence.
“People on the receiving end of an AFrO will not only have their existing assets frozen and banking relationships in jeopardy, but are also likely to find it very difficult to open a new bank account, which can cause serious practical difficulties for those concerned.”
*Year to 5 April 2022