Account Freezing Orders And Account Forfeiture Orders In Gambling

Account Freezing Orders – court orders which freeze funds in a bank account (or multiple bank accounts) – are increasingly being used by police forces around the country to obtain control of funds associated with gambling, with a view to confiscating those funds.

Crucially, these are civil rather than criminal orders. There is no need for any criminal conviction for the funds to be frozen or confiscated. In fact, in the majority of cases, the account holder is never charged with a criminal offence, even when the court decides that the funds should be forfeited. This is because the court applies the civil standard of proof (balance of probabilities) rather than the criminal standard (beyond reasonable doubt) when deciding whether the funds should be forfeited.

What is an Account Freezing Order?

Under section 303Z1 of the Proceeds of Crime Act 2002, certain law enforcement agencies (typically the police or the National Crime Agency) can apply to the court for an order that the sums in a particular bank account are frozen (meaning they cannot be removed by withdrawal or transfer) if there are reasonable grounds for suspecting that the funds represent 'recoverable property' or are intended to be used for unlawful conduct. In simple terms, this means funds reasonably suspected to be the proceeds of crime or intended for use in committing a crime.

A freezing order is an interim order. Its purpose is to safeguard the funds while it is established whether or not they should be forfeited to the state.

Importantly, the police are entitled to apply for freezing orders without informing the account holder. The Act permits this only where prior notification would risk the police being unable to obtain a forfeiture order – in other words, if the money might be moved before it can be frozen.

In our experience, some police forces are particularly quick to conclude that there is a risk of dissipation of the funds and apply without notifying the account holder. The practical effect is that the police attend the freezing hearing unopposed. This creates a risk that the court receives, albeit unintentionally, a lop-sided account of the facts.

It is also the case that the courts are very quick to grant freezing orders, whether or not they are opposed. These orders are usually granted for several months in the first instance (often six months), but they can remain in place for up to two years.

What is an Account Forfeiture Order?

Under section 303ZP of the Act, in respect of sums that are subject to a freezing order, the police are entitled to issue an Account Forfeiture Notice to the account holder if they believe the funds are the proceeds of crime or are to be used to commit a crime.

Many people receiving an Account Forfeiture Notice are surprised by its consequences. It effectively notifies the account holder that the frozen funds will be confiscated after 30 days unless the account holder objects. If there is no objection, the funds are automatically confiscated – no further court hearing or order is required.

If an objection is made, the police must apply to the court for an order that the frozen money should be forfeited. The account holder is entitled to attend the hearing and argue that the money should not be forfeited.

At the hearing, although it is for the police to satisfy the court that the funds are the proceeds of crime or intended for criminal use, the practical reality is that the burden often falls on the account holder to provide a reasonable explanation of why the funds are legitimate.

The Use of Freezing and Forfeiture in Gambling

In the modern gambling landscape, many banks are uncomfortable with seeing transactions with bookmakers on their customers' accounts. It is not unusual for banks to report customers to the authorities simply because there are considered to be a 'suspicious' number of transactions relating to gambling. How the authority in question will react to a report is frankly something of a lottery.

Another unfortunate reality is that many people outside the gambling world believe it is impossible for gamblers to win significant sums. Sadly, it is not unheard of for the police to argue that the mere fact a customer has won money is suspicious because 'punters cannot win at gambling'. Nor is it unheard of for courts to sympathise with such arguments.

Practical Tips

Different police forces approach their investigations in different ways. As noted above, some are very quick to apply to the court for freezing orders without notifying the account holder, while others are more inclined to give notice and some even first seek an informal explanation. Much will depend on the circumstances and the strength of their concerns.

Speed is of the essence: the earlier the account holder reacts, the greater the chances of preventing funds from being frozen for months on end or even confiscated altogether. Ideally, efforts should be made to engage with the police (or other relevant agency) and provide a satisfactory explanation for the funds before a freezing order is sought. Of course that is not always possible as explained above. However, regardless of when it is provided, considerable care must be taken when providing any explanation in circumstances where neither the police nor the court is likely to understand very much, if anything, about gambling. An unclear or confusing explanation of entirely legitimate gambling activities can inadvertently raise suspicions and make matters worse.

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.