BANK ACCOUNT FROZEN?


Archbold Solicitors is frequently contacted by bank account holders who have had their bank accounts frozen by their bank without prior warning or explanation, and desperately struggle to know why their accounts have been frozen and when they will be unfrozen.

Often the account holder discovers this when s/he attempts to withdraw, transfer or deposit money from/into the account or when using some other method of accessing the account such as a debit card, or the ATM.

  1. NOTE: This article does not deal with the frozen bank accounts of suspected overstayers for immigration purposes.

WHY HAS MY BANK ACCOUNT BEEN FROZEN AND WHAT IS THE RELEVANT LAW?

Very possibly, someone at the bank or the banks computer system has flagged up your account for unusual activity. Suspicion of money laundering is often cited as the primary reason for freezing an otherwise perfectly healthy bank account.

The legal basis for the most part is to be found in Part 7 of the Proceeds of Crime Act 2002, particularly in sections 335 and 340.

Your account has most probably been referred to your bank’s Money Laundering Reporting Officer (MLRO) to see if a Suspicious Activity Report (SAR) should be made to the National Crime Agency (NCA). A SAR will be filed with the NCA if the MLRO decides that a valid basis for a suspicion of money laundering exists on your account.

BANK CONSENT REQUEST FOR UNFREEZING OF ACCOUNT

Normally your bank will not tell you whether it has filed a SAR with the NCA or when it filed a SAR. But the SAR will include a consent request to the NCA for the bank to unfreeze your account. Your account will remain frozen until either the NCA has given your bank authorisation to unfreeze your account, or the ‘notice period’ has expired without your bank receiving any reply at all from the NCA.

WHAT IS THE NOTICE PERIOD?

This is the period for which your account may normally be kept frozen by the NCA. The notice period is seven working days beginning from the day after the bank files the SAR with the NCA.

However, if the NCA requires more time to consider the matter the NCA will respond to your bank by refusing consent. When that happens, your account will remain frozen until the ‘moratorium period’ elapses.

WHAT IS THE MORATORIUM PERIOD?

The moratorium period is 31 days starting with the day on which your bank received refusal of consent from the NCA. Your frozen account should be unfrozen on the next working day unless the NCA has obtained an extended moratorium period from a court under the Criminal Finances Act 2017 which allows a court to extend the ‘moratorium period’ by up to a further six months (186 days). This also means that an account can be frozen for up to about 32 weeks without a ‘restraint order. During the ‘moratorium period’ the NCA will continue to consider the position and may at any time give your bank consent to unfreeze your account.

WHAT HAPPENS WHEN THE MORATORIUM PERIOD AND ANY EXTENDED PERIOD HAS ENDED BUT THE NCA DOES NOT GIVE CONSENT?

If the NCA refuses consent, then your bank should unfreeze the account once the moratorium period has expired unless in the meantime the NCA has obtained a restraint order from a Crown Court judge.

WHAT IS A RESTRAINT ORDER?

Generally, a restraint order is used to freeze all your assets indefinitely. If a restraint order has been obtained from a Crown Court judge, then copies of that order must be served promptly on your bank and on you.

A bank account holder who is served with a copy of a Crown Court restraint order should seek legal advice from a solicitor.

CAN I SUE MY BANK?

A case concerning the freezing of a bank account when a SAR had been filed with the NCA by the bank was considered by the Court of Appeal in the case of The National Crime Agency v N & Royal Bank of Scotland plc [2017] EWCA Civ 253 (07 April 2017). The court held that it would only very rarely be appropriate for a court to interfere with the temporary freezing of a bank account where a SAR had been made to the NCA.

Disclaimer

Any opinions expressed in this article are those of the author and do not in any way represent the views or opinions of Archbold Solicitors. The author cannot be held responsible by anyone acting on the advice contained in this article as the author cannot guarantee the correctness of the law or opinions or information used in this article beyond the date on which the article was posted.


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