‘Freezing of accounts: a clash between the law and human right’

Consistent with the provision of the law, the temporary restraint of funds or financial assets is permitted to further the course of investigation into suspected proceeds of crime. Competent authorities includ­ing regulators, supervisors, law enforcement and the judiciary may direct and confirm the freezing of accounts or financial assets of suspected proceeds of crime to prevent the sweeping of funds from the account before investiga­tions are concluded.

Freezing of an account is a ‘post no-debit’ instruction placed on the accounts of natural and legal persons pending investigations. This is a precautionary measure to prevent unauthorised access and to allow for investigations into po­tential wrongdoing. The outcome of freezing is that account holders cannot withdraw funds, make transfers or process payments on the account.

Financial assets including bank accounts, stocks and shares may be frozen for varied reasons including protection against illegal activity, fraud, tax evasion or compliance obligations. Persons whose ac­counts are frozen temporarily shall be informed within forty-eight hours and within seven days where a freezing order is secured. Affect­ed persons may seek redress from court.

In line with Anti-Money Laundering (AML) requirements, financial institutions are to monitor the accounts of their customers for suspicious patterns, large or unusu­al transactions, transactions to and from high risks locations (domestic and international), other red flags indicative of money laundering or other illegal activities. If a financial institution detects suspicious activ­ities, it may suspend transactions on the account and file a suspicious transaction report to the relevant competent authority, for further directives. Based on the analysis of the report, the competent authority may direct the financial institution to freeze the financial asset tem­porarily until the freezing order is confirmed by the court.

Where accounts have been fro­zen, financial institutions are to no­tify account holders of the freezing directive by the competent author­ity. Indeed, a frozen bank account could pose some inconvenience to the account holder, his family and/ or his business. It is therefore the responsibility of account holders to avoid raising suspicion on their financial transactions.

How long can an account be frozen?

Upon reasonable grounds of financial crime, relevant competent authorities may freeze an account for a limited period between seven to fourteen days, apply to the Court for a freezing order and notify persons affected. Once a freezing order is secured, the inves­tigative agencies have up to twelve months to conclude investigations and where they are unable to conclude investigations within the period, they may apply to court for an extension.

Reliefs for frozen accounts

One of the biggest challenges for account holders whose ac­counts get frozen is that they begin to think that they may have to wait until investigations are concluded before they could have access to the funds in the account. However, there is good news. The person who is affected by the freezing order may apply to court to seek reliefs from the account. Reliefs are made subject to the conditions that the court considers appro­priate and may include orders to release reasonable amounts from the frozen account to cater for the living expenses of persons affect­ed, his dependants and reasonable business expenses.

How to prevent an ac­count from being frozen?

Individuals and businesses have a responsibility to ensure that their financial activities/ transactions are not suspicious. It is often said, ignorance is not an excuse to the violation of law and so all are expected to understand their legal obligations not to cause doubt about their financial transactions. Competent authorities and finan­cial institutions are not interest­ed in restraining persons from accessing their financial assets. In order to prevent accounts from being frozen, there is the need to regularly check bank statements for unfamiliar or suspicious transac­tions activity, unexpected receipt of funds on accounts, keep informa­tion including names, occupation and expected transactions up-to-date with financial institutions, notify financial institutions of expected financial transactions backed by relevant documents (receipts, invoices, bill of laden, contractual documents, land etc.), avoid long periods of inactivity on the account, avoid using accounts to receive unknown sources of funds on behalf of third parties and use separate accounts (per­sonal and business) for different purposes. Financial institutions that reasonably suspects that funds may be connected to unlawful proceeds shall submit a suspicious transaction report to the relevant competent authority for directives and further investigations.

Human right

Human rights are rights we have simply because we exist as human beings. These universal rights are inherent to all, regardless of nationality, sex, national or ethnic origin, colour, religion, language or any other status. They range from the most fundamental – the right to life – to those that make life worth living, such as the rights to food, education, work, health, and liberty.

Fundamental human rights are enshrined in national constitutions or international human right laws. For instance, the 1992 Constitution of Ghana provides that the funda­mental human rights and freedoms shall be respected and upheld by the Executive, Legislature and Judiciary and all other organs of government and its agencies and, where applicable to them, by all natural and legal persons and shall be enforceable by the Courts. Ev­ery person regardless of race, place of origin, political opinion, colour, religion, creed or gender shall be entitled to the fundamental human rights and freedoms.

Is the freezing of an

account an infringement

on fundamental human

right?

Although the freezing of a finan­cial assets or accounts can poten­tially infringe upon human rights, it is legal. Freezing of financial asset or an account serves as a legitimate tool for law enforcement agencies in their investigative process. It is worthy to note that, the 1992 Constitution of Ghana upholds that fundamental human rights be subjected to the respect for the rights and freedoms of others and public interest. Therefore, where a person through suspicious financial transactions, becomes a security concern or public interest, that person’s fundamental right may be temporarily restrained to prevent access to his account and that would not qualify as an abuse of that person’s fundamental hu­man right.

Also, the law provides that ac­count holders whose accounts are frozen should be notified and that, financial institutions are to preserve the funds, other assets and instru­mentalities of crime for a period to facilitate investigations. Also, to prevent hardship to account hold­ers whose accounts are frozen, the law permits certain payments to be made out of the frozen account to ensure that the fundamental human rights of persons affected by the freezing order are not violated.

While some fundamental human rights may be temporarily limited during an investigation into sus­pected proceeds of crime, compe­tent authorities are to follow due processes throughout the admin­istrative, investigative and adjudi­cation process in order to protect fundamental human rights.

The writer is a Financial Crime Specialist

BY RITA YEBOAH QUAYSON

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