Why are more business assets being targeted by investigative bodies?

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Since 2017, law enforcement agencies and their partners have been granted further powers, designed to help recover the proceeds of crime, tackle money laundering, tax evasion and corruption.

Before the Criminal Finances Act 2017, the police and other authorities had far fewer options when it came to freezing funds ahead of prosecution. Over the last five years, investigative bodies have become increasingly opportunistic, meaning that there is often little or no evidence to suspect the funds being frozen are the product of criminal activity.

For businesses, the impact of these draconian investigative measures can be catastrophic, and in some cases place an organisation in jeopardy.

This is because, while media attention often focuses on cases involving the extremely wealthy, the reality is that people from a broad range of backgrounds can find themselves at the centre of an investigation.

The minimum balance needed in an account for funds to be frozen is £1,000, which can make it incredibly difficult for people to be able to make everyday payments, such as rent, wages and bills. While accounts can only be frozen for a maximum of two years, there is no guarantee that an individual or business would have their funds returned to them when this period is over.

With the emphasis being placed on the party being investigated to be able to account for and defend what is legally theirs, it is clear that more needs to be done to make people aware of the steps that should be taken should they find themselves the victim of this highly intrusive and invasive measure.

for businesses, there is a greater chance that they could at some point find their assets frozen and be forced to defend what is legally theirs

From our research, we know that there is a steady increase in the number of assets being frozen as a result of account freezing orders and other investigative measures. It is reasonable to assume that this increase is the result of authorities becoming more comfortable with the powers awarded to them.

With there being little evidence to suggest a reduction in the frequency at which law enforcement rely on these measures, it is reasonable to assume that their regularity will continue to increase. This will mean for businesses, there is a greater chance that they could at some point find their assets frozen and be forced to defend what is legally theirs.

Over recent years, JMW’s Business Crime team has experienced a notable uptick in the number of businesses requiring legal support after having their assets targeted by investigative bodies – often as a result of a misunderstanding that could be resolved.

The team recently worked with a client who had experienced a great deal of stress from having her personal account blocked by the bank, due to some international money transfers and miscommunication. Below, the team outlines what happened.

International property development and a misplaced suspicion and investigation

JMW was instructed by our client that her personal account had been blocked by the bank, after having received funds from Africa relating to a property development project her and her family were undertaking in the region. There was confusion as a result of a conversation she had with her bank over how the transfer would be made to the construction company abroad.

Our client’s request to make payments in installments, rather than in one large lump sum to the construction company, was seen as suspicious, due to the bank misinterpreting her request and believing she was looking to withdraw £100,000 of cash so that she could take it to a different banking facility.

As you would imagine, our client was shocked to find herself facing such serious accusations and was concerned about the impact this would have

This misunderstanding found our client at the centre of a money laundering investigation and saw the police visit her home to serve her with an application stating that they would be applying to the Court within a number of days for an account freezing order for six months.

As you would imagine, our client was shocked to find herself facing such serious accusations and was concerned about the impact this would have on the progress of her and her family’s international property development business.

The team worked closely with our client to ensure that she was well prepared and had the best chance of a positive outcome. This included; sourcing all relevant information, carrying out a financial analysis and proving the provenance of the funds in question.

When the time came, the hearing lasted over four hours and based on the evidence gathered and provided by JMW, the Court was not satisfied the legal test had been met and accordingly refused to grant the application to freeze our client’s account for a further six months as applied for by the police.

Despite the positive outcome of this case, this process cost the client a considerable amount in legal costs and also put her through a great deal of stress due to a misunderstanding for which our client was not to blame. She was therefore incredibly grateful for our support and representation, along with the achieved outcome.

JMW Solicitors is a full-service law firm with offices in London, Manchester and Liverpool

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