The bank accounts of over 90 students, many of them Chinese, have been frozen as part of an operation between the National Economic Crime Centre (NECC), police and law enforcement agencies. These authorities obtained account freezing orders using powers newly available by virtue of the Criminal Finances Act 2017, which amended the Proceeds of Crime Act 2002 (the Act). The orders were granted by courts across England and Wales, including City of London magistrates' court and courts in Birmingham, Cardiff, Crawley, Kent, Leeds, Lincoln, Mansfield, North Somerset and Teesside.
Under the Act, authorities now have the ability to seek to freeze accounts in circumstances where the investigating officer has reasonable grounds for suspecting that money held in an account is the proceeds of crime or is intended for use in unlawful conduct. Thereafter, depending upon any response made by the individual whose account has been frozen and the outcome of any enquires undertaken by the investigators, the authorities' next move will be to seek an order permitting the permanent forfeiture of the funds in question.
In cases brought by the NECC and its partners, the authorities are said to have focused on accounts which have received cash deposits and transfers which, it is alleged, are the proceeds of crime. In some instances, those allegations include the suggestion that students may be engaging in a practice whereby goods are purchased outside China but then sent to China in return for a commission payment. This behaviour, known as Daigou, is alleged to be a way of circumventing Chinese import tariffs imposed on overseas goods. In addition it is suggested that some students seeking to circumvent Chinese annual limits on capital transfer have engaged with illicit money transfer agencies, and that in other instances students' accounts have become "mule" accounts for laundering the proceeds of crime.
For those who are affected by an application or an account freezing order that has already been granted by a court, it will be important to seek legal advice regarding the appropriate way to respond to the authorities. Importantly in that regard, although proceedings for account freezing orders and forfeiture are civil in nature, any response needs to take account of the possibility of a criminal investigation into the same or related matters. Mishcon de Reya's white collar crime lawyers are able to advise such individuals on the best course of action in these circumstances.