Section 34 of the Economic and Financial Crimes Commission (EFCC) Act provides for a freezing order on banks and other financial institutions. By virtue of this provision, the EFCC Chairman or any officer authorized by him may apply to the court for power to issue a Post No Debit (PND) order to freeze an account. The bank or other institution may also be required to supply information and documents relating to the account, as well as to stop all outward payments from the account.
It is not unusual for individuals and organizations to find out rather embarrassingly that their accounts have been frozen, usually after someone has attempted to present a cheque, or at the point of carrying out an important transaction.
Courts have however consistently frowned at the indiscriminate use of this power by law enforcement agencies. In the 2019 case of Guaranty Trust Bank (GTB) Plc v. Adedamola, the respondent’s account had been frozen due to investigations based on suspicion of money laundering. He instituted an action against GTB and EFCC for the release of his account, and for damages. He succeeded at the trial court, and the decision was appealed. The Court of Appeal, while dismissing the appeal, declared that any bank, before acting on such instructions must be satisfied that there is an order of court obtained by the agency giving the instruction. In the absence of a court order, such instructions would amount to a violation of the customer’s rights.
The court further stated that the EFCC is not a court of law and must operate within the confines of the law, following due process at all times.
Also, earlier this year, an Ikeja High Court ordered Diamond Bank Plc to pay a lawyer, Adetokunbo Odutola, Twenty Five million naira (N25m) as damages for unlawfully freezing his bank account. Responding to the bank’s contention that the action was carried out on the instruction of the EFCC, the Court stated that only a court of law, and not any law enforcement or anti-corruption agency could make such an order.
Therefore, the position of the law is clear – a bank can lawfully place restrictions on any accounts, on instruction received by an agency investigating a financial crime. This is subject to having previously obtained a court order to this effect. The real catch however, is that the order can be obtained ex parte which means without the consent or knowledge of the account owner, thus still resulting in some embarrassment.
Going the ex parte route is nonetheless the most effective way of preventing a suspected person from travelling out of the jurisdiction to evade arrest, or moving the funds out of the account, thus frustrating investigations.
Syntax Legal Practitioners 