Suspicious Activity Reports: moratorium period to be extended to six months

On 13 October 2016, the Criminal Finances Bill 2016-17 was put before the House of Commons for the first reading.  The Bill proposes to update the legislative measures regarding proceeds of crime, with the overall aim being effective recovery, countering terrorist financing and tackling money laundering and corruption.  In respect of money laundering, one of the most prominent proposals is an amendment to the Suspicious Activity Report regime.

The chief proposal in this area is the power for the Court to extend the moratorium period to 186 days (just over six months) to allow for a full and effective police investigation.  The Proceeds of Crime Act 2002 currently makes provision for a moratorium period of 31 days following a seven working day notice period after disclosure is made.  Under the proposed legislative reforms, investigating officers would then have the option to apply to the Crown Court for up to five separate 31-day extensions where the suspect’s account, or a specific transaction, would remain frozen without explanation.

With the Court’s permission, ex parte applications will be made by the National Crime Agency without releasing any information that they intend to rely upon.  The Court must, however, be satisfied that the notification/presence of the interested party or their representative would harm or interfere with the gathering of evidence, hinder the recovery of assets, pose a threat to national security or cause a person to be interfered with or injured.

In extending the moratorium period, the Crown Court would need to be satisfied of a number of points, namely that there is an ongoing investigation being conducted expeditiously and diligently, that further time is required for said investigation and that it would be reasonable, given the circumstances, to extend the moratorium period.  Such applications must be made before the expiry of the current moratorium period.

The proposal is a controversial one.  The existing regime is already controversial and draconian. The effect of the extensions would be that suspects would not have access to their funds for up to six months and would only be able speculate as to why.  At best, this would be an exasperating experience for those that had received, for example, an inheritance or financial help from their families abroad.  At worst, the effect (say on a business) could be financially ruinous.  If this measure were to be enacted, the Courts would have to take a stringent line as to whether the investigations were being carried out expeditiously and ensure that ex parte applications were properly interrogated.

The Criminal Finances Bill 2016-17 is currently before the committee stage.

Click here to see how Brett Wilson LLP can assist you if your bank account has been frozen without explanation.

Click here to see Brett Wilson LLPs briefing note on Suspicious Activity Reports.