Search warrants at banks in the UK: what you need to know

20 September 2018

Many a CF11 money-laundering reporting officer has watched the police carry his bank's computers away in the knowledge that this will bring its business - or part of it - to a grinding halt. What can a firm do to minimise disruption of this kind and challenge a search warrant?

 

In this blog, which was first published in Compliance Matters, Vivien Cochrane takes the compliance officer through the vagaries of English law, with a checklist for action at the end. 
 

Introduction

The Law Commission recently announced a consultation into the law and practice governing search warrants, with the aim of proposing a simpler, more streamlined set of rules. The current position is well known to be confusing and complicated, and whilst it is still relatively rare for warrants to be executed at corporate premises, many of the legal challenges to unlawfully executed warrants come from corporates whose premises have been raided by the police, HMRC, or the SFO – the Kaupthing investigation is one such example. So whilst change is in the pipeline, it is worth considering the current position and what you should be aware of should a search warrant ever be executed at your offices.

The current law

A search warrant is a catch all term for a document which gives an investigating agency permission to enter premises to identify and seize material, usually with the aim of furthering an investigation into suspected criminality. In a criminal investigation, the police have some additional powers to search premises where a person has been arrested, but for the purposes of this guidance, we focus on searches being conducted under a warrant.

How do investigators obtain a search warrant?

Most search warrants are granted under section 8 of the Police and Criminal Evidence Act 1984, commonly referred to as “PACE”. In most circumstances, the police, HMRC, the SFO and other investigating agencies use the mechanism set out in PACE to obtain a warrant. However there are a number of additional pieces of legislation which can also permit entry for more specific purposes, such as the Proceeds of Crime Act 2002 which can be used to obtain evidence of money laundering.

In general terms, a police officer or otherwise authorised investigating officer, will make an application for a search warrant to magistrate or District Judge. The application is in writing and is made without notice to the parties under investigation.

However, there are specific categories of material which are exempt from seizure under PACE, and under most other powers. Material which is subject to legal professional privilege is completely exempt from seizure. Broadly speaking, this is material containing or evidencing advice from lawyers, or third parties (such as witnesses or experts) where it concerns litigation.

Two further categories of material – excluded material and special procedure material – require specific conditions to be met before seizure is permitted. Excluded material includes medical and counselling records and confidential journalistic material, and special procedure material is defined as confidential business records and non-confidential journalistic material.

It is important to be aware of these specific categories of material as, for example, HR files may contain documents which are excluded material, and in many circumstances warrants executed on commercial premises will need to have satisfied the criteria for obtaining confidential business records which come under the category of special procedure material.

What happens when a search warrant is executed?

There are certain features of the search warrant which you can check in order to satisfy yourself that it is in order, and will be of assistance if you require specialist advice on whether or not the search warrant was valid.

When a warrant is granted it should clearly state the name of the person who applied for it, the date on which it was issued, the provision(s) under which it was issued, each set of premises to be searched (or the person to whom the premises relate if it is an ‘all-premises’ warrant) and details of the material sought. A warrant authorises entry on one occasion only, unless it specifically states that it authorises multiple entries, in which case it must also specify whether the number of entries authorised is unlimited or limited to a specified maximum. Entry and search under a warrant must be within three months of the date of its issue.

An officer conducting a search is obliged to identify him or herself to the occupier and to provide a copy of the warrant to him or her. If you have concerns relating to the validity of the warrant these should be brought to the officer’s attention, and recorded in writing at the time. In some circumstances you may be able to persuade the investigating authority to delay the search whilst you seek advice on the validity of the search warrant, but they have no obligation to do so, and you must be cautious around this as any refusal of entry could incur the risk of prosecution for obstruction.

As mentioned above, in order to seize special procedure or excluded material, investigating authorities must use a specified procedure set out in PACE. In our experience investigating authorities are often ignorant of these provisions, and even if they are aware of them, they misunderstand their application. There is therefore a high possibility that a search warrant could be mistakenly granted in respect of material which should have been subject to more stringent conditions. If you are faced with the prospect of an investigating authority intending to seize files which may contain medical and/or counselling records, confidential business records or any kind of journalistic material you should ensure that you consider the warrant carefully and seek advice as soon as practicable if you do not have the requisite expertise in-house.

In some extreme circumstances, handing over material under a defective warrant may leave a company or individual at risk of prosecution for offences under the Data Protection Act, so it is essential to take advice, or ensure that you have the requisite knowledge of this area of the law in-house.

Material subject to Legal Professional Privilege

Material subject to LPP is completely exempt from seizure, so when considering documents of this sort the central issue is whether that material can be properly categorised as being subject to LPP. In order to make this distinction, which is often less clear cut than it appears, investigating authorities often instruct a barrister, known as Independent Counsel, to make decisions about whether documents attract LPP. Independent Counsel sometimes accompany officers on the search, or reviewing material potentially subject to LPP which has been seized by officers after the search, or both.

The term Independent Counsel is slightly misleading in that the barrister is instructed by the investigating authority but their role is limited to deciding on LPP. They will not be the barrister presenting the case at court, and they will not advise in relation to any other matters.

It is important to note that issues of LPP are considered on a document by document basis. For example, not all documents in a file labelled “Correspondence with Solicitors” will be agreed as being subject to LPP. It would be standard practice for the investigating authorities to seize a file of this sort in order to ask Independent Counsel to review the material to identify whether it is covered by LPP, so even if you tell the officers that a document is subject to LPP, they will almost certainly still seize it in order to ascertain the position before returning it.

However it is still essential that if your premises are being searched that you make the officers conducting the search aware of the presence of any LPP material so that the correct procedure is followed. If the search has been conducted without officers being made aware of LPP material, it is important to make the point in writing as soon as possible after the search, preferably to the most senior officer in charge of the investigation. If no notice is given there is a risk that privilege may be deemed to have been waived.

What if LPP material is mixed with non LLP material?

As in the example of the file of solicitor’s correspondence above, it is not unusual for LPP material to be mixed with, or inextricably linked to, non LPP material. This is even more likely to be the case when you consider electronic material such as servers, mailboxes, hard drives and USB sticks. In these cases, material potentially subject to LPP will almost certainly be present alongside non LPP material.

The law allows investigators to seize the entirety of a mixed file, server, or any other electronic device in order for it to be reviewed by Independent Counsel at a later date. The exact nature of the review process varies from investigation to investigation but in almost all cases it will be necessary for both the individuals concerned (if they are subjects of the investigation) and the company (regardless of whether it is under investigation or not) to be involved and to take advice on their position.  This will help ensure LPP material is identified and that privilege is preserved. This is particularly the case from the company’s perspective if the allegations relate to the conduct of an individual, but the material seized contains documents belonging to the company and potentially subject to the company’s LPP.

How to challenge a search warrant

Judicial Review is the mechanism by which search warrants are challenged. If a challenge is successful then the High Court can quash the warrant and order the return of seized material. However, there are provisions allowing the Crown Court to consider issues relating to the seizure of the material, without considering the validity of the warrant itself. Any person with a ‘relevant interest’ in the seized property may apply to the court for the return of the property if certain grounds are met, for example that there was no power to make the seizure, or that the property contains LPP, excluded or special procedure material. However, it is advisable to consider the position very carefully before embarking on any sort of challenge, particularly given the strict time limits and costs implications.

How can I limit the disruption to our business if our premises is searched?

There are simple steps that can be taken to minimise disruption and ensure business continuity in the event of a search being conducted at business premises.  The majority of this advice is common sense: ensure that electronic and hard copy files are in good order, are clearly and appropriately labelled, and that only those who require access, have access. If an investigation centres on a particular individual, the warrant may allow seizure of all documents to which he or she had access, so think carefully about how wide ranging that power may be in your organisation. Be aware of what material exists, or ought to exist, and be clear on where it is located for two reasons: so that you can assist if investigators require a specific file or document, and so that you can say with certainty what has been taken after a search has been executed, rather than wondering whether something has simply been misplaced. Ensure that confidential or privileged material is clearly labelled on its face, and in the subject heading of emails and letters and on the watermark of documents. Even if this is challenged at a later date it indicates clearly the creator’s state of mind and easily identifies material that should be subject to further review before being seized by an investigator. 

Conclusion

There are likely to be few situations more intimidating than being faced by investigating authorities bearing a search warrant, and the prospect of challenging their right to enter premises and seize items may seem out of the question. The guidance above is intended to equip you with the confidence to respond appropriately and expeditiously should the need arise.


CHECKLIST

  1. Does the warrant contain the required information on its face?

    It should state the name of the person who applied for it, the date on which it was issued, the specific provision under which it was issued, each set of premises to be and details of the material sought.

     
  2. Excluded or Special Procedure Material
    If the search warrant seeks to obtain files containing medical and/or counselling records, confidential business records or any kind of journalistic material has the correct procedure been followed.

     
  3. Privileged Material
    Material subject to LPP cannot be seized. Make any claim to LPP at the 
    earliest opportunity and ensure and that notice is also given in writing.
     
  4. Mixed Material 
    Is there a possibility that items to be seized under the warrant may mixed with privileged, excluded or special procedure material? Ensure this is flagged at the earliest opportunity and that notice is also given in writing.
     
  5. Have you been provided with the requisite information regarding the items seized?
    You are entitled to the Notice of Powers and Rights and a copy of the warrant. You may also be entitled to copies of the Premises Search Book(s) and the Record of Items Seized. If you are not provided with this on the day make a request in writing as soon as practicable after the search.
     
  6. Do you wish to challenge the search warrant or request return of any items seized?
    The mechanism for challenge is generally by way of judicial review. Given the strict time limits you should seek advice on the position at the earliest opportunity. There are other mechanisms by which you may be able to obtain access to, copies of or the return of items seized. Occasionally this can be done by agreement.

This blog was first published in Compliance Matters, September 2018.

Further information

Should you have any questions about the issues covered in this blog, please contact a member of our Criminal Law team.

See also our other recent blogs for further information:

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