Partner Frances Murray, associate Emily Russell and legal assistant Edward Griffin from the financial crime team along with associate Harry Yu from the immigration team, explore the implications of being served with an Account Freezing Order (AFO) on one's UK visa status and future immigration prospects.
What is an Account Freezing Order?
The Criminal Finances Act 2017 amended Part 5 of the Proceeds of Crime Act 2002 (POCA) to introduce Account Freezing Orders (AFO) and Account Forfeiture Orders (AFRO). Applications for AFOs and AFROs are generally brought by HM Revenue and Customs, the National Crime Agency (NCA), the Serious Fraud Office or local Police forces. AFOs are often used by UK law enforcement agencies as they are relatively quick to obtain and cost effective.
How AFOs are obtained
An AFO is granted by the magistrates’ court to freeze a UK bank or building society account with a balance of more than £1,000. Whilst these applications are made in the magistrates’ court, the procedure follows a civil standard of proof and therefore the UK law enforcement agency need only satisfy the civil burden of proof being ‘on the balance of probabilities’ (i.e. more likely than not). To apply for an AFO, the law enforcement agency must show that there are reasonable grounds of suspecting that money held in an account is recoverable property (obtained through unlawful conduct), or is intended by any person for the use in unlawful conduct.
An application to the magistrates’ court for an AFO can be made without notice to the respondent if notice of the application would prejudice the taking of any steps to later forfeit the monies, which in most instances is deemed to be the case.
After the AFO is granted, the respondent (i.e. account holder) receives a copy of the order at their address and the relevant bank receives a corresponding copy of the order informing them that the funds are not to be moved.
Duration and effects of an AFO
An AFO can remain in force for a period of up to two years. Whilst the AFO is in place, the law enforcement agency can conduct their investigation into the origins of the funds or their intended use. At any point, the law enforcement agency can apply to the Magistrate’s Court for an AFRO to forfeit the money in the account. To do so, they need to have prepared sufficient evidence proving that on the balance of probabilities, the funds are derived from unlawful conduct or are intended for use in unlawful conduct.
If the magistrates’ court find in favour of the law enforcement agency, the money will be forfeited via an AFRO (although there is a right of appeal within 30 days to the Crown Court).
The straightforward nature of the application and the low bar for granting has meant that AFOs and AFROs are becoming increasingly popular with the authorities. According to government statistics in 2022-2023, £141.8 million was recovered via 1,400 AFOs and AFROs, and £133.1 million in the year before. By way of comparison, AFOs and AFROs are easier to apply for than Unexplained Wealth Orders (UWO), also introduced by the Criminal Finance Act 2017. The subject of a UWO must explain their interest in property and how it was obtained. Failure to comply can lead to an investigatory body applying for a Civil Recovery Order to recover this property. However, whereas the balance held in an account must contain more than £1,000 in order to apply for an AFO, for UWOs the value of the relevant property must be in excess of £50,000. Whilst the Economic Crime and Corporate Transparency Act 2023, which received royal assent on 26 October 2023, attempted to reform and strengthen the UWO regime to overcome their perceived underuse, it is hard to imagine that this will make AFOs and AFROs any less popular.
AFO impact on foreign nationals
These civil remedies can, of course, be directed at accounts held by foreign nationals. A clear example of this came in 2019 when the NCA froze 95 Barclay’s bank accounts held by mostly Chinese students. These accounts held an estimated £3.6 million which, it was alleged by the NCA, was laundering illicit cash obtained in the UK to buy luxury items for onward sale in China.
Where a foreign national, subject to UK immigration control is served with an AFO, it is imperative that they consider how these proceedings will affect their current UK immigration status and future prospects of becoming a British citizen.
How will an AFO affect my visa?
The immigration implications of being found liable for forfeiture may in some cases outweigh the pain of losing one’s assets under POCA proceedings. This is because the Home Office has wide ranging powers to cancel one’s UK immigration status outright (including Indefinite Leave to Remain) or to refuse an individual’s upcoming immigration application. Without immigration permission to be in the UK, one becomes liable for removal if they are in the UK or can be denied entry if they are outside the UK.
On a high level, for most non-EEA migrants, the Home Office’s powers to refuse/cancel one’s immigration status are found under Part 9 of the Immigration Rules. Following forfeiture proceedings in the magistrates’ court, if the court decides in favour of the law enforcement agency and issues an AFRO, then there may be several grounds on which the Home Office can cancel an individual’s existing leave or refuse their next immigration application, namely:
Non-conducive to the public good
The Immigration Rules allow leave to be cancelled/refused if:
“the applicant’s presence in the UK is not conducive to the public good because of their conduct, character, association or other reasons”.
From the outset, the Home Office has wide discretion to decide what is and isn’t conducive to the public good.
In many POCA cases, there are situations where the respondent has passively come into possession of illicit funds seized (e.g. if they are a customer of an underground bank) and there are situations where the respondent may have been actively involved in generating the illicit funds seized. The facts of their case will determine how the Home Office perceives their conduct/character and whether or not they are associated with criminals. As such, whether or not the Home Office will use this ground will depend on the particular facts of the case.
The Home Office provides specific guidance to its caseworkers on proceeds of crime, namely:
“If you have reliable information that a person has benefitted from the proceeds of crime, particularly where that financing is directly relevant to their application to enter or stay in the UK, you must also consider if they meet the test for refusal or cancellation of permission on non-conducive grounds… A person does not need to have had action taken under the Proceeds of Crime Act 2002 to be refused on the basis of corruption or benefitting from the proceeds of crime”.
This suggests that the threshold for caseworkers to consider cancelling one’s leave is relatively low in practice, even if the law enforcement agency does not pursue forfeiture proceedings or even apply for a freezing order. It is not clear what would count as ‘reliable information’ and whether or not the existence of a forfeiture order would qualify.
Furthermore, financing can be directly relevant to one’s application for permission to enter or stay in the UK on many immigration routes including the Tier 1 (Investor) visa, Tier 1 (Entrepreneur) visa, Innovator visa, spouse visa and so forth.
The Home Office has discretion to cancel/refuse one’s leave where it may “unfavourably affect the conduct of foreign policy”. This ground is particularly interesting as sometimes POCA proceedings can arise from allegations against the migrant in their home country. It is unclear how the Home Office would consider this ground in practice in cases where the UK authorities initiated POCA proceedings as part of a Mutual Legal Assistance program with their foreign counterparts (which is not uncommon).
Under the criminality grounds, the Home Office has discretion to cancel one’s leave/refuse one’s application if they have received a criminal conviction/custodial sentence of less than 12 months, a non-custodial sentence or an out-of-court disposal that is recorded on their criminal record.
The Home Office’s criminality guidance states that Confiscation and Forfeiture Orders are to be regarded as out-of-court disposals.
The Home Office policy is not entirely clear as the POCA regime as Confiscation Orders fall under part 6 of POCA and comes after a criminal conviction, whereas Forfeiture Orders (AFROS) as mentioned above, are civil in nature. It should be elaborated that AFROs are in rem (i.e. against the money itself) and not in persona (i.e. not against the owner/person). Nothing further is said in the Home Office guidance about Forfeiture Orders. As such, it can only be concluded that in the Home Office’s eyes, it may be considered as an out-of-court disposal regardless.
Part 9 of the Immigration Rules also requires that the out-of-court disposal to be recorded on one’s criminal record, for it to be considered a discretionary ground to cancel/refuse one’s leave.
Further grounds on which the Home Office may use to cancel one’s immigration status or refuse one’s application is on the grounds of false representation. Home Office guidance states:
“Immigration applicants are required to disclose all offences and consequent penalties both in the UK and overseas, in addition to other relevant information about their conduct, character and associations. Application forms make clear to applicants where they must disclose this information and that failure to declare it may lead to refusal of that application”
Where one is subject to POCA proceedings or has been found liable of forfeiture, this information may be disclosable to the Home Office. Failure to do so may result in their application or leave being cancelled on the basis of having lied to the Home Office.
Innovator Founder visa fit and proper person requirement
Those who hold Innovator/Innovator Founder visas or looking to apply for one are subject to an additional requirement, namely the fit and proper person test.
This test gives the Home Office the discretion to refuse/cancel one’s Innovator Founder visa if the migrant is or has been “the subject of any serious civil or criminal investigations or proceedings with regard to corruption or other financial crime or financial misconduct”.
For someone who holds Indefinite Leave to Remain, POCA proceedings may not only affect their settlement status, but may also affect their ability to become a British citizen.
The requirements for British citizenship are entirely separate from the immigration regime described above. Applicants for British citizenship (above the age of ten) are required to be of good character. ‘Good Character’ is determined on the balance of probabilities taking into account one’s character, negative factors, mitigating factors, and so forth. As such, the question of whether or not being found liable for forfeiture will jeopardise one’s naturalisation application will differ on a case-by-case basis.
Partner Frances Murray is in the financial crime team, and has a wealth of experience in financial crime and is uniquely placed to support clients that are the subject of Account Freezing Orders or Account Forfeiture Orders.