Power of the EFCC to Freeze an Account Suspected to Be Involved in Financial Crime for 72 Hours without a Court Order

CASE TITLE:  UNITED BANK FOR AFRICA, PLC v. ERIBA JUDE-BELA EJE & ORS (2022) LPELR-57973(CA)

JUDGMENT DATE:  1ST JULY, 2022

JUSTICES:  PETER OLABISI IGE, JCA

CORDELIA IFEOMA JOMBO-OFO, JCA

MUSLIM SULE HASSAN, JCA

COURT DIVISION:  MAKURDI

PRACTICE AREA:  GOVERNMENT AGENCY- ECONOMIC AND FINANCIAL CRIMES COMMISSION

FACTS:

Eriba Jude-Bela Eje (1st Respondent) maintained accounts with the Appellant (United Bank or Africa, Plc) and the 4th Respondent (Polaris Bank Plc) as their customer.

The 2nd (Mr. Johnson Babalola) and 3rd Respondents (EFCC) unilaterally ordered the freezing of the 1st Respondent’s accounts with the Appellant and the 4th Respondent. The 1st Respondent became aware of the freezing of his accounts when he went to make withdrawals with his ATM and it was not working. He went into the Appellant’s bank to make a complaint and they informed him that he cannot make withdrawals on the ground that the EFCC had given an order that his accounts should be frozen. This made him visit the office of the EFCC to find out why his accounts were frozen and he was informed without more that the money in his account are proceeds of crime.

​He explained to the officers of the EFCC that he owns a YouTube Channel but they insisted on conducting a search at his house and immediately impounded his vehicle. Upon conclusion of the search during which nothing incriminating was found, his lawyer applied for his bail but same was turned down by the 3rd Respondent on the basis that they were not done with investigation.

​It was the 1st Respondent’s case that even though he was willing to provide reasonable surety, the EFCC denied him bail and detained him from the 11th of March, 2019, to the 14th of March, 2019, at the directive of the 2nd Respondent. Even after the eventual grant of bail, his accounts remained frozen.  This spurred the 1st Respondent to commence a suit for the enforcement of his fundamental rights at the trial Court.

The trial Court entered judgment for the 1st Respondent by awarding damages of N5,000,000.00 (Five Million Naira) only jointly and severally against the Appellant and 2nd- 4th Respondents for freezing the accounts of the 1st Respondent.

Dissatisfied, the Appellant appealed to the Court of Appeal.

ISSUES:

The appeal was determined upon consideration of the issue thus:

1. Whether the trial Court had jurisdiction to hear and determine this suit under the Fundamental Right Enforcement Procedure Rules.

2. Whether the Appellant Bank had the power to freeze the account of the 1st Respondent without Court order pursuant to Section 6 (5) (b) of the Money Laundering Prohibition Act.

3. Whether on the state of pleading, it was the Appellant or the 1st Respondent who had the onus of proof that the account of the 1st respondent was unfrozen before the expiration of 72 hours or frozen beyond 72 hours.

COUNSEL SUBMISSIONS

Learned Counsel for the Appellant submitted that the provisions of Section 6 (2) (a) – (f) of the Money Laundering Act empowers the EFCC to enforce the provision of the Money Laundering Act. That the provision of Section 6 (5)(b) of the Act does not require the 3rd Respondent to obtain a Court order before requesting the Appellant to Post No Debit (PND) on the account of the 1st Respondent, as the only question that begs for answer is whether there exists a suspicious ground for the 3rd Respondent to place a stop order on the account of the 1st Respondent.

Counsel submitted that 3rd Respondent by Section 34 of the EFCC Act has power to direct a bank to freeze the account of a person under investigation and the Appellant owes the society a duty to obey the directives of the 3rd Respondent given the danger of financial crimes, corruption and money laundering in our society. Therefore, the Appellant is not liable to the 1st Respondent as she just obeyed the directives from a law enforcement agency.

On the other hand, Learned Counsel for the Respondents submitted that even though the Appellant is bound to comply with the directives of the 2nd and 3rd Respondents, the compliance is not automatic but dependent on an order of Court. In this case, there was no such order and neither was there any evidence that 1st Respondent committed any crime. That even if the 1st Respondent committed an offence, the EFCC cannot on its own order the freezing of the 1st Respondent’s account without a Court order.

Counsel submitted that the Appellant had no obligation to act on EFCC’s instructions or directives without a Court order as the judiciary has the onerous duty of preserving and protecting the rule of law. That EFCC is not a Court of law so as to move against the account of a person suspected of crime without due process. The EFCC must 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 to freeze any account.

Counsel further submitted that assuming but not conceding that Section 6 (5)(b) of the Act was relied upon to order the Appellant to freeze the 1st Respondent’s account, the order was supposed to last for 72 hours, and it was clear that the account of the 1st Respondent was frozen for more than 72 hours, therefore, the Appellant cannot rely on the provision of Section 6 (5) (b) of the Money Laundering Act.

DECISION/HELD

In conclusion, the appeal succeeded in part. The judgment of the trial Court as it affects the Appellant in respect of the order that the unlawful and illegal freezing of the accounts of the 1st Respondent by the Appellant is a violation of the 1st Respondent’s right to dignity of human person and that the Appellant should immediately unfreeze the said accounts was affirmed, while the order that the Appellant should jointly and severally pay the 1st Respondent the sum of (Five Million Naira) only as compensation for the breach of the 1st Respondent’s fundamental rights was set aside. Alternatively, the sum of N500,000.00 (Five Hundred Thousand Naira) was awarded as compensation against the Appellant in favor of the Respondent.

RATIO

1. GOVERNMENT AGENCY- ECONOMIC AND FINANCIAL CRIMES COMMISSION: Power of the Economic and Financial Crimes Commission to place a stop order or freeze an account suspected to be involved in financial crime for 72 hours without a Court order; effect where the freezing exceeds 72 hours without a Court order –

“Section 6 (5) (b) of the Money Laundering Act provides: Notwithstanding the provisions of paragraph (a) of this sub-section, the Chairman of the Economic and Financial Crimes Commission or his authorized representative shall place a stop Order not exceeding 72 hours on any account or transaction if it is discovered in the course of their duties that such account or transaction is suspected to be involved in any crime.” By the provision of Section 6 (7) ”Where it is not possible to ascertain the origin of the funds within the period of stoppage of the transaction, the Federal High Court may, at the request of the commission, or other persons or authority duly authorized in that behalf, order that the funds, accounts or securities referred to in the report be blocked.” Section 6 (8) states that ”An order made by the Federal High Court under Sub-section (7) of this section shall be enforced forthwith.” 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. From the available evidence in the records the 1st Respondent account domiciled with the Appellant have been frozen by the Appellant since the 8th of March, 2019. The 72 hours have long lapsed and the account are still frozen without a Court order and as rightly submitted by the 1st Respondent’s counsel that the Appellant is not empowered to freeze the account of the 1st Respondent without a Court Order after 72 hours and so doing amounts to a total disregard to the rights of the 1st Respondent and as such a breach of the fundamental right of the 1st Respondent.” “Per HASSAN, J.C.A.”