Bank account freeze by a public prosecutor in poland – legal grounds, appeal and compensation

Bank account freeze in Poland – what does it mean in practice?

The scope of the freeze should follow from the document on which it is based. Depending on the procedure applied, this may be:

• a bank decision temporarily freezing a specified amount;
• a demand issued by the General Inspector of Financial Information;
• a demand issued by the Chair of the Polish Financial Supervision Authority or their deputy;
• an order issued by a public prosecutor;
• an asset seizure order;
• an order concerning physical evidence.

In practice, it is therefore essential to establish not only that the account has been frozen, but also who imposed the freeze, on what legal basis, for what amount, and for what period.

Legal grounds for a bank account freeze in Poland

A bank account freeze is not governed by a single Polish statute. In cases involving a suspected criminal offence, the following provisions are of primary importance:

1. Article 106a of the Polish Banking Law Act;
2. Article 16 of the Act on Cooperative Savings and Credit Unions;
3. Articles 86 and 87 of the Anti-Money Laundering and Counter-Terrorist Financing Act;
4. Articles 39 and 40 of the Act on Capital Market Supervision.

Bank account freeze under the Polish Banking Law Act

One of the legal grounds most frequently used to freeze the bank accounts of foreign nationals is Article 106a of the Polish Banking Law Act.

Under this provision, where a bank has reasonable grounds to suspect that all or part of the funds held in an account derive from, or are connected with, a fiscal offence or another criminal offence, the bank may freeze the funds in the account on its own initiative.

This procedure does not concern the offences of money laundering or financing of terrorism. Those offences are primarily covered by the procedure set out in the Anti-Money Laundering and Counter-Terrorist Financing Act.

A bank may freeze only the funds to which the reasonable suspicion relates. For example, if an account contains PLN 100,000 and the suspicion concerns a transaction of PLN 20,000, freezing the entire PLN 100,000 would require separate and specific justification. The existence of a suspicious transaction for a lower amount should not automatically result in all funds in the account being frozen.

How long may a bank freeze an account on its own initiative?

A freeze imposed independently by a bank may remain in force for no more than 72 hours. After imposing the freeze, the bank should immediately notify the public prosecutor.

Within the 72-hour period, the public prosecutor decides whether to open proceedings or refuse to open them. If proceedings are opened, the prosecutor may issue an order continuing the suspension of the transaction or the freezing of funds in the account for a period not exceeding six months from receipt of the bank’s notification.

The public prosecutor may also impose a freeze without a prior bank freeze where the conditions set out in Article 106a(3a) of the Polish Banking Law Act are met.

Can the bank account freeze be extended?

Yes. The public prosecutor may extend the freeze for a further specified period not exceeding an additional six months.

In practice, a freeze imposed under the Polish Banking Law Act may therefore remain in force for up to 12 months. Before that period expires, however, the prosecutor may issue an asset seizure order or an order concerning physical evidence. In that event, the continuing restriction on the use of the funds is based on a different procedural measure and may last for more than one year.

Bank account freeze under Polish AML legislation

A separate procedure applies where there is a suspicion that a transaction or particular assets may be connected with money laundering or financing of terrorism.

In such a case, the bank and other obliged institutions should notify the General Inspector of Financial Information (GIIF).

Bank account freeze – the first 24 hours

After receiving a notification, GIIF confirms its receipt. From the moment of confirmation, the obliged institution must not carry out the specified transaction or any other transaction debiting the account for a period not exceeding 24 hours, unless it earlier receives a freezing demand or information releasing it from this obligation.

It is therefore incorrect to state that a bank merely notifies GIIF and takes no action until a formal demand is issued. Once receipt of the notification has been confirmed, a temporary statutory obligation not to execute transactions already applies.

Bank account freeze by GIIF for up to 96 hours

If GIIF concludes that a transaction may be connected with money laundering or financing of terrorism, it may require the obliged institution to suspend the transaction or freeze the account.

The freeze may remain in force for no more than 96 hours. GIIF must specify the assets covered by the demand.

GIIF may also initiate a freeze on its own initiative and not only following a notification received from a bank or another obliged institution.

Saturdays and statutory public holidays are not included when calculating the 24-hour and 96-hour periods under the AML Act. In practice, a freeze may therefore last longer than one or four calendar days respectively.

Bank account freeze by a public prosecutor

After receiving a notification from GIIF, the public prosecutor may issue an order suspending the transaction or freezing the account for a specified period not exceeding six months.

The order may also be issued without a prior notification from GIIF.

The public prosecutor may subsequently extend the freeze for a further specified period not exceeding an additional six months. If an asset seizure order or an order concerning physical evidence is not issued before the freeze expires, the freeze ceases to apply.

Frozen bank account funds as physical evidence

For many years, serious doubts arose as to whether funds held in a bank account could be treated as physical evidence.

In its 2021 resolutions, including the resolution of 13 October 2021, case no. I KZP 1/21, the Polish Supreme Court stated that funds recorded in an account do not have the tangible character of a thing and could not be treated as conventional physical evidence. The Court also emphasised the protective function of the statutory time limits and the serious burden imposed by a bank account freeze.

The current legal position is different. Article 236b of the Polish Code of Criminal Procedure now expressly provides that funds held in an account are also treated as a thing or object for the purposes of the provisions on the seizure of items and physical evidence. An order concerning physical evidence may therefore cover funds held in an account if they have been retained as evidence in the case.

The Polish Supreme Court resolutions of 2021 can therefore no longer support a categorical assertion that funds held in an account may never be treated as physical evidence.

The following arguments nevertheless remain relevant:

• the exceptional nature of a bank account freeze;
• the requirement to interpret the legal grounds for the freeze strictly;
• the obligation to limit interference with property rights to what is strictly necessary;
• the requirement to identify the particular funds allegedly connected with an offence;
• the prohibition on automatically extending a freeze without reviewing whether the grounds for it remain current.

What should you do after your bank account has been frozen in Poland?

After learning of the freeze, the account holder should first establish:

1. which authority imposed the freeze;
2. the legal basis for the freeze;
3. whether the freeze results from a bank decision, a demand issued by GIIF or KNF, or an order issued by a public prosecutor;
4. the amount covered by the freeze;
5. when the freezing period began;
6. whether an order extending the freeze, imposing an asset seizure, or treating the funds as physical evidence has already been issued;
7. the reference number of the proceedings.

The bank may not be entitled to provide the client with full information concerning the reasons for the freeze. It should, however, at least indicate whether the freeze was imposed at the request of a particular authority, unless disclosure is excluded by specific legislation or by the postponement of notification of the order.

Once the case reference number has been established, steps should be taken to obtain a copy of the order and access to the materials necessary to challenge the freeze.

Appeal against a public prosecutor’s bank account freezing order

An order issued by a public prosecutor concerning a bank account freeze may be appealed to the court competent to hear the case.

The appeal is filed through the public prosecutor who issued the contested order. The prosecutor may allow the appeal directly. If the prosecutor does not do so, the appeal and the case file are forwarded to the competent court.

The deadline for filing the appeal is seven days:

• from the date on which the order is announced;
• where the law requires service of the order, from the date on which it is served.

The deadline does not therefore always run simply from the date on which the account holder learns that the account has been frozen. The manner in which the particular order was announced or served is decisive.

The seven-day deadline is a mandatory procedural time limit. As a rule, an appeal filed after it expires will be ineffective unless the statutory conditions for reinstatement of the deadline under the Polish Code of Criminal Procedure are satisfied.

If it is not possible to collect all documents or obtain translations within seven days, this should not delay filing the appeal. The safer course is to file the appeal within the deadline and supplement the legal arguments and evidence before the court considers it.

What arguments may be raised in an appeal against a bank account freeze?

The appeal must always be adapted to the particular order and the facts of the case. There is no single universal argument that will succeed in every case. In practice, the following grounds should be considered in particular.

Failure to demonstrate a connection between the funds and a specific offence

A general reference to a suspicion that a criminal offence has been committed should not be sufficient to freeze a bank account.

The public prosecutor should explain why the particular funds or transactions are connected with a specified act. Reasons referring only to the “developing nature of the investigation”, high turnover, or international transfers may be insufficient if they do not explain the alleged criminal character of the funds.

Freezing an amount exceeding the amount covered by the suspicion

The freeze should be limited to the amount to which the reasonable suspicion relates.

If the suspicion concerns a single transaction or an identifiable portion of the funds, freezing the entire account may breach the principle of proportionality unless the authority demonstrates that the remaining funds also derive from, or are connected with, an offence.

Absence of individualised reasons

The order should not merely repeat the wording of the statutory provision.

The authority should present specific circumstances concerning the particular account, its holder, the transactions carried out, and the purpose of maintaining the freeze.

It is particularly important to verify whether the reasons for the order are formulaic and whether they genuinely address the business activities conducted by the account holder.

Breach of the principle of proportionality

The freeze should be necessary to achieve a specific objective of the proceedings and must not impose a burden greater than necessary.

The appeal may refer, among other matters, to:

• the impact of the freeze on the business’s financial liquidity;
• the risk that salaries cannot be paid;
• the possibility of tax arrears arising;
• the risk that counterparties will terminate contracts;
• the inability to pay the basic costs of business operations;
• the availability of less intrusive measures capable of protecting the interests of the proceedings.

The severity of the freeze does not automatically require it to be lifted. It may, however, justify reducing the frozen amount, shortening the freezing period, or applying a different measure.

Lawful origin of the frozen funds

The appeal should be accompanied by documents explaining the commercial and legal basis of the transactions, such as:

• contracts;
• invoices;
• orders;
• transport documents;
• proof of performance of services;
• accounting records;
• tax returns;
• statements from other bank accounts;
• documents confirming the source of capital;
• correspondence with counterparties;
• explanations concerning the structure of the transactions and the flow of funds.

The documents should be presented in an organised and comprehensible manner. In cases involving numerous transactions, it may be helpful to prepare a table showing the dates, amounts, parties, grounds for payment, and corresponding documents.

Passage of time and lack of progress in the proceedings

Every extension of a bank account freeze should be based on current circumstances.

Arguments from an earlier order should not be automatically repeated without explaining:

• what investigative steps have been taken since the freeze was imposed;
• what new evidence has been obtained;
• why maintaining the freeze remains necessary;
• when the activities concerning the frozen funds are expected to be completed.

The longer the freeze remains in force, the more important it becomes for the authority to provide detailed reasons demonstrating why it remains necessary.

Will the court hold a hearing?

As a rule, the court considers the appeal at a session. The waiting time depends on the court, the volume of the case material, and the speed with which the prosecutor forwards the file. Until the appeal is considered, further documents confirming the lawful origin of the funds and the economic consequences of the freeze should be collected. It should nevertheless be remembered that filing an appeal does not, as a rule, automatically unfreeze the bank account.

Compensation for an unlawful bank account freeze

The fact that a bank account freeze remains in force for more than 72 hours does not automatically entitle the account holder to compensation.

After 72 hours, the freeze may lawfully continue on the basis of an order issued by a public prosecutor. It may subsequently be extended or replaced with an asset seizure order or an order concerning physical evidence.

The legal basis for liability depends on the procedure under which the freeze was imposed.

Liability under the Polish Banking Law Act

Under Article 106a(10) of the Polish Banking Law Act, a bank is not liable for loss resulting from the good-faith performance of its obligations connected with the freeze.

If the circumstances forming the basis of the freeze were not connected with an offence or with concealing criminal activity, the State Treasury may be liable for the loss resulting from the freeze. This does not mean that compensation is paid automatically. The injured party must prove that loss occurred, quantify that loss, and demonstrate a causal link between the freeze and the loss.

Liability in other cases

Under other procedures, claims may in particular be based on the provisions governing the liability of the State Treasury for the unlawful exercise of public authority.

Depending on the facts, a bank or another institution may also be liable where it implemented the freeze contrary to the authority’s demand, exceeded its scope, or froze accounts or funds not covered by the applicable legal basis.

An assessment of liability therefore requires establishing:

• who issued the decision to impose the freeze;
• who actually implemented the freeze;
• whether the freeze complied with the law;
• whether the correct account and amount were identified;
• whether the institution implemented the demand in accordance with its terms;
• whether the account holder suffered actual loss.

What losses may be claimed?

Loss resulting from a bank account freeze may include both actual loss and loss of profits, provided that their occurrence and amount are properly proven. Depending on the circumstances, recoverable loss may include:

• contractual penalties and interest resulting from late payment;
• loss of a deposit or advance payment;
• the cost of alternative financing;
• additional costs of loans or credit facilities;
• lost orders;
• lost margin on specific contracts;
• the costs of suspending or restricting business operations;
• legal, accounting, or expert costs that are adequately connected with the event;
• loss of counterparties;
• loss resulting from non-performance of contracts.

It is not sufficient merely to state that the freeze disrupted the business. It is necessary to demonstrate precisely that the particular loss was a normal consequence of the freeze rather than of other financial or organisational difficulties affecting the business.

In more complex cases, a private economic or accounting expert opinion may assist in determining the amount of actual loss and loss of profits.

Bank account freeze affecting a business – why is rapid action necessary?

A bank account freeze may cover funds required for the day-to-day operation of a business. At the same time, the deadline for filing an appeal is generally only seven days. During this period, the following steps should be taken:

• establish the legal basis and scope of the freeze;
• obtain the public prosecutor’s order;
• analyse the reasons given in the order;
• identify the transactions covered by the suspicion;
• collect documents confirming the lawful origin of the funds;
• determine the economic consequences of the freeze;
• prepare and file the appeal.

The absence of complete documentation should not result in the deadline being missed. The appeal may subsequently be supplemented with further arguments and evidence.

Summary

A bank account freeze in Poland may be imposed on several different legal grounds. Depending on the applicable procedure, the initial freeze may last 72 or 96 hours, while a freeze imposed by a public prosecutor may remain in force for six months and be extended for a further six months.

Before that period expires, the funds may be made subject to an asset seizure order or an order concerning physical evidence, which may further restrict the account holder’s ability to use the funds.

The account holder is not, however, without legal remedies. An order issued by a public prosecutor may be appealed, generally within seven days. It is crucial to demonstrate the lawful origin of the funds, the absence of any connection with an offence, the disproportionate nature of the freeze, or the improper determination of its scope.

Compensation is not awarded automatically merely because of the duration of the freeze. A claim requires the identification of the applicable basis of liability, proof of the loss, and proof of a causal link between the unlawful action and the loss suffered.