england-and-wales banking money-laundering
Recourse to recover funds in a frozen account
<p>Under anti money laundering laws if a bank has grounds for suspicion of money laundering by a customer then they may submit a SAR (suspicious activity report) to the NCA (National Crime Agency) and freeze the account for 7 days while awaiting a consent declaration from the NCA to unfreeze the customer's account. If they refuse consent because they wish to further investigate then the bank account may stay frozen for 31 more days.</p>
<p>Beyond this time, legally, keeping the account frozen requires a court order. All the while, a bank is prohibited from informing the customer of any details concerning the status of their account because they shouldn't &quot;tip off&quot; the customer to let them hide evidence or otherwise inhibit an investigation.</p>
<p>In a case involving relatively trivial amounts of money in a frozen account like £3000, if the bank has refused to unfreeze the funds for over 3 months, what recourse does the customer have to challenge the situation with respect to their funds?</p>

<p>The bank cannot, purely at the customer's behest, unfreeze an account where there is an extant Account Freezing Order made under the <a href="https://www.legislation.gov.uk/ukpga/2002/29/part/5/chapter/3B?timeline=false" rel="nofollow noreferrer">Proceeds of Crime Act 2002</a>.</p>
<p><a href="https://www.legislation.gov.uk/ukpga/2002/29/section/303Z3?timeline=false" rel="nofollow noreferrer">Section 303Z3</a> requires, among other things:</p>
<blockquote>
<p>(3)An account freezing order ceases to have effect at the end of the period specified in the order (which may be varied under section 303Z4) unless it ceases to have effect at an earlier or later time in accordance with the provision made by sections 303Z9(6)(c), 303Z11(2) to (7), 303Z14(6) to (8) and 303Z15.</p>
<p>(4)The period specified by the relevant court for the purposes of subsection (3) (whether when the order is first made or on a variation under section 303Z4) <strong>may not exceed the period of 2 years</strong>, starting with the day on which the account freezing order is (or was) made.</p>
<p>(5)<strong>An account freezing order must provide for notice to be given to persons affected by the order.</strong></p>
</blockquote>
<p>The account holder, as a person affected by the order, is notified of the order by the applicant - not the bank so there's no concern over &quot;tipping off&quot;.</p>
<p>The holder may then apply to the court to have it set aside under <a href="https://www.legislation.gov.uk/ukpga/2002/29/section/303Z4?timeline=false" rel="nofollow noreferrer">section 303Z4</a>:</p>
<blockquote>
<p>(1)The relevant court may at any time vary or set aside an account freezing order on an application made by—</p>
<p>[...]</p>
<p>(b)any person affected by the order.</p>
</blockquote>
<p>Only then can the bank (lawfully) unfreeze the account.</p>
<ul>
<li><strong>Further detail in answer to OP's comment...</strong></li>
</ul>
<p>An application for an Account Freezing Order is made a under <a href="https://www.legislation.gov.uk/ukpga/2002/29/section/303Z1?timeline=false" rel="nofollow noreferrer">section 303Z1</a>:</p>
<blockquote>
<p>(1)This section applies if <strong>an enforcement officer</strong> has reasonable grounds for suspecting that money held in an account maintained with a elevant financial institution—</p>
<ul>
<li><p>(a)is recoverable property, or</p>
</li>
<li><p>(b)is intended by any person for use in unlawful conduct.</p>
</li>
</ul>
<p>(2) ... the <strong>enforcement officer</strong> may apply to the relevant court for an account freezing order in relation to the account in which the money is held.</p>
<p>[...]</p>
<p>(6) [...] <strong>&quot;enforcement officer&quot;</strong> means—</p>
<ul>
<li><p>a) an officer of Revenue and Customs,</p>
</li>
<li><p>(b) a constable<sup>1</sup>,</p>
</li>
<li><p>(c) an SFO officer, or</p>
</li>
<li><p>(d) an accredited financial investigator who falls within a description specified in an order made for the purposes of this Chapter by the Secretary of State or the Welsh Ministers under section 453;</p>
</li>
</ul>
</blockquote>
<p>What channels each different enforcement agency use to give notice to persons affect by the order under s.303Z3(5), above, is a matter for their own internal processes and procedures - but it is not uncommon to hand deliver it to the account holder and email / post it to the bank.</p>
<p>If the account is frozen under an Order but the account holder has not received their statutory notice, then they could consider asking the bank for proof that such an Order is in place and who made the application.  This detail should be made available by the bank to justify their freezing of the account, and enable the holder to contact the applicant to arrange service of the Notice.</p>
<hr />
<p><sup>1</sup> most NCA investigators and financial investigators are designed with the powers of a constable</p>
