UK: The Moratorium Period: What It Does To Your Property, And What To Do When A Court Is Asked To Extend It

Last Updated: 29 July 2019
Article by John Binns

Few people who receive a notice of an application to extend a moratorium period under the Proceeds of Crime Act 2002 (POCA) will have the slightest idea what it means. An unfortunate effect of the evolution of the POCA regime over the years is that it appears long ago to have ceased trying to be intuitive or to have much if anything to do with common sense.

For those seeking to understand what it is the notice they have just received is trying to say, the short version is this: someone (it may not be clear who) suspects your property represents the proceeds of crime, and the police (or some other law enforcement body) want more time to work out what to do about it.

What has my account/property got to do with money laundering?

The slightly longer explanation starts with the very broad definition of money laundering in POCA, which broadly prohibit virtually any act in connection with property that represents the proceeds of 'criminal conduct' (which here means any crime in the UK, or anything done overseas that would have been a crime if it had happened here), where the person doing the act knows or suspects that this is so. Each of those sections contains a defence where the person seeks consent to do the act and either receives it explicitly, or waits for specified period. That period is either seven working days or (if they receive a refusal of consent before then) a 'moratorium period' lasting a further 31 calendar days. After the period expires, the person has 'deemed consent' and can do the act they asked for consent to do.

Who has made a suspicious activity report about me, and why?

In practice, most of these requests for consent come from the 'regulated sector' (which includes banks, accountants, most solicitors, and others), who also have additional obligations to make reports of suspicious activity, and not to 'tip off' relevant people that such reports have been made. The reports and consent requests are made to the National Crime Agency (NCA) via an online portal, and while most are dealt with within that initial seven working days, the more complex ones – including many that have an international element – take longer.

Why is the court being asked to extend the moratorium period?

The situation when a court is asked to extend a moratorium period, therefore, is one where: (a) someone, probably your bank or another institution in the regulated sector, perhaps while carrying out its obligations under the MLR, has formed a suspicion about you or your property; (b) that person has requested consent from the NCA to do something with your property (perhaps a transaction you have asked them to help with); (c) the police, the NCA, or another law enforcement agency has begun an investigation; and (d) it is important to them that for the time being, the act for which consent has been requested does not take place.

Why has no-one told me clearly what's going on?

Part of the reason why the circumstances, in particular the reason for the suspicion, may yet be unclear is that the bank (or whoever) has so far been wary of 'tipping off', and the police (or whoever) may now be wary of giving you information that may prejudice their investigation. That of course may put you at a disadvantage in deciding what to do.

Is there anything I can do about it?

Nevertheless, you have a right to respond at this stage to the application and to try to persuade a court that the moratorium period should not be extended (which would, in effect, enable the person who asked for consent to do the act they asked for consent to do). The issues for the court are whether (a) an investigation is ongoing, (b) it is being carried out 'diligently and expeditiously', (c) further time is needed for it, and (d) it is 'reasonable' to extend.

What's going to happen to my account/property?

The impact of an extension of course depends on what the property is and what you intend to do with it. It may be that in some circumstances the prospect of a bank account being blocked or a transaction being delayed for a further 31 calendar days may not be disastrous, and you may reasonably agree to the extension. Two things should be borne in mind, however: first, there may be further extensions (up to six are allowed in total); and second, it is well worth considering the various other legal and practical impacts that the investigation may have.

Could this lead to something worse?

To elaborate on the latter, while the reality may be that there is no reasonable basis for suspicion about you or your property, the impact of an investigation can include various investigative orders against you and/or others who may hold relevant information or material (which may prompt banks and others to withdraw from relationships with you), and/or other measures against your property (or property in which you have an interest), such as account or property freezing orders.

What can I do to protect myself?

The good news is that the present application may offer you an opening to find out more about what is being investigated, and an opportunity to get ahead of it. In some cases, that may mean opening a dialogue with the investigators, with a view to providing assistance and/or reaching some sort of compromise. In others, it may mean starting to marshal your defences to a case that may have the potential to become more combative.

Do I need advice?

In either case, the essential point is that, though both the legal provisions and the circumstances that have brought them into your life may seem somewhat obscure, it is important that you both treat them seriously, and take the opportunity to understand them and apply them to your best advantage. In practice that process will always start with seeking practical advice from true experts in this increasingly complex field.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions