Introduction
Freezing an account is a temporary measure that restricts access to and use of a financial account, initiated by the financial institution or other authorities. The legal authorities in contemplation include the Central Bank of Nigeria, Economic Financial Crime Commission (EFCC) and other legal authorities permitted by law.
The primary reasons for freezing an account includes; preventing fraudulent activities so as to safeguard client assets and prevent unauthorized withdrawals or transfers when suspicious activities are detected, to comply with court orders, regulatory requirements, or government actions such as garnishments, unpaid taxes, or suspected criminal activities and to address issues between account holders or between an account holder and the financial institution.
This essay will unfold the legal instrument that regulates and governs the freezing of bank accounts by commercial banks, the condition precedent that must be fulfilled before such acts can be executed and the present legal position in respect to the status quo The legal implications for the freezing of ones bank account by commercial banks will also be established in seriatim.
Legal Instruments and Condition Precedent to Freezing of an Account
The provision of Section 34(1) of the EFCC ACT is to the effect that “Notwithstanding anything contained in any other enactment or law, the Chairman of the Commission or any officer authorized by him may, if satisfied that the money in the account of a person is made through the commission of an offence under this Act or any enactments specified under section 6(2) (a)-(f) of this Act, apply to the Court ex parte for power to issue or instruct a bank examiner or such other appropriate regulatory authority to issue an order as specified in Form B of the Schedule to this Act, addressed to the manager of the bank or any person in control of the financial institution where the account is or believed by him to be or the head office of the bank or other financial institution to freeze the account.
Succinctly, the above already established provision envisages that the EFCC should obtained a court order before instructing the manager of the bank or any person in control of the financial institution where the account is or believed by him to be or the head office of the bank or other financial institution to freeze the account. This condition precedent has been judicially established in avalanche of cases. See G.T.B. Plc vs Adedamola (2019) 5 NWLR (Pt. 1664) 30(P. 41, paras. F-G), Dangabar vs F.R.N(2014) 12 NWLR (Pt. 1422) 575,
On the duty on Economic and Financial Crimes Commission to follow due process before freezing a bank customer’s account where allegation of crime is in issue: The court held that where there is allegation of commission of crime against a customer of a Bank in relation to the funds in his account, the Commission is empowered by law to set in motion the process of investigating any such funds perceived to be derived from proceeds of crime. In conducting the investigation, the commission is required to observe due process and satisfy the requirements of the law. The Commission or its officers must go to court and obtain an ex parte order before freezing the account; any failure to follow due process will render the action taken by the Commission a violation of the rights of the customer.
It is apposite to note that there is a duty on the financial institutions to ensure that before freezing customer’s account or placing any form of restraint on any bank account, a bank must be satisfied that there is an order of court. By the provisions of section 34(1)of the Economic and Financial Crimes Commission Act, 2004 the Economic and Financial Crimes Commission has no power to give direct instructions to Banks to freeze the account of a customer without an order of court, so doing constitutes a flagrant disregard and violation of the rights of a customer. See G.T.B. Plc v. Adedamola (Supra)
Resolution of Conflict Between Section 34 Of The Efcc Act, 2003 And Section 7 of the Money Laundering Act
The opening provisions of section 34 of the EFCC ACT, makes use of the opening phrase, “Notwithstanding anything contained in any other enactment or law…”. The law is trite that when the word “notwithstanding” is used in the section of a statute or the constitution, it is meant to exclude an impinging or impeding effect of any other provision of the constitution; statute or other subordinate legislation in order for the said section to fulfill itself. See: NDIC vs. Okem Ent. (2004) 10 NWLR (Pt) CA, Ndaba (Nig.) Ltd vs. UBN Plc (2009) 13 NWLR (Pt. 1158) 256 at 304; Saraki v. FRN (2016) LPELR-40013 (SC) (Pp. 96 paras. B)
Despite the express provisions of the aforementioned section, it will interest you to know that Section 7 of the Money laundering Act is to some extent contrary to the provisions of section 34 of the EFCC Act and this call for a resolution.
A candid question that should be taken into consideration is whether the Money Laundering Act which was enacted on a later date can be made enforceable given the fact that it is contrary to the express provision of section 34 of the EFCC Act.
The law is trite that where there is a conflict in two legislations of the same status the later in time will he deemed to repeal the former. See Olu of Warri v. Kperegbeyi (1994) 4 NWLR (Pt.339) 416 referred to]. (P. 309, paras. C-D), C.C.B. (Nig.) Plc. v. Ozobu (1998) 3 NWLR (Pt. 541) 290 CA, C.B.N. v. Regd. Trustees, N.Β.Α.(2021) 5 NWLR (Pt. 1769) 268 CA
It is therefore safe to say that, the Money Laundering Act 2022, particularly section 7 of the said law, by implication has repealed section 34 of EFCC Act 2003 and it is to this extent that the condition precedent of obtaining a court order as contemplated in section 34 of EFCC Act is thus relaxed to some extent.
Present Legal Position in Respect to the Obtaining of Court Order.
It has been hitherto established that the section 7 of the Money Laundering Act has impliedly repealed section 34 of the EFCC Act, it is pertinent to point out that pursuant to section 7(1)(a) of the EFCC ACT 2004, the Economic Financial Crime Commission is charged with the responsibility of enforcing the provisions of the Money Laundering Act.
Section 7 of the Money Laundering Act, 2022 envisages that, the EFCC may temporarily halt a suspicious transaction or account for a maximum of 72 hours and the bank is legally required to abide by the stop order. After the temporary stoppage expires, the account restriction must be released and the transaction must be conducted if no court order is obtained to block the account or transaction. This is consistent with the ruling in UBA PLC v. A-G BENUE STATE & ORS (2022) LPELR-58695(CA). In United Bank For Africa, Plc V. Eriba Jude-Bela Eje & Ors (2022) LPELR-57973(CA), the court established that by virtue of the above provisions, it is not in doubt that the 3rd Respondent has the powers to place a stop order or freeze an account suspected to be involved in financial crime for 72 hours, without a Court order. Upon the expiration of the 72 hours and where the commission is not done with its activities in respect of the account, a court order has to be obtained to extend the life of the order freezing the account. Where the required Court order is not made available, the stop order or freezing the account lapses and the financial institution is obliged to unfreeze the account.
Conclusion
A perusal of the relevant legal instruments regulating the freezing of accounts by commercial banks, (especially the recent ruling) affirms the EFCC’s authority to block an account for a maximum of 72 hours without a court order. This seems to be a little divergence from the previous rulings of the court noted above and the bank is obliged to make sure that no additional restrictions are placed on the account after the specified 72 hours have passed unless it can verify that a court order has been obtained in this regard.
This piece was written by Aniefiok Ini ukpong. Ani is a Legal Intern with Legal Emperors located at #32 Wellington Bassey Way, Uyo, Akwa Ibom State. He can be reached via ukponganiefiok2020@gmail.com.