Monitorships & Independent Reviews

The spectre of a failure to prevent economic crime offence for corporates once again received attention during a debate in parliament on 13 January 2021 as part of the consideration of the Financial Services Bill.

The SFO’s entered into its ninth deferred prosecution agreement (DPA) earlier today, this time reaching a resolution of bribery allegations with a company called Airline Services Limited. With other corporate cases still on its books, we can expect to see more DPAs as these cases work through the system. So, what does that mean for companies which might be caught up in an investigation?

In a press release dated 22 October 2020, the Serious Fraud Office (SFO) announced that it had reached an agreement in principle regarding a Deferred Prosecution Agreement (DPA) with Airline Services Ltd (ASL). This agreement is subject to approval from the Court, which will be sought from Mrs Justice May at a public hearing at Southwark Crown Court, sitting at the Royal Courts of Justice, on 30 October 2020. Subject to the approval, the SFO have stated that the DPA will conclude its investigation into ASL and its conduct.

The Government announced its intention to introduce an Economic Crime Levy in the Budget 2020. This is designed to fund government action to tackle money laundering and help deliver the reforms committed to in the Economic Crime plan 2019-2020. It has since followed up on this - on 21 July - with the launch of a consultation as to how such a levy would operate.

In September 2019, HM Revenue and Customs (HMRC) published its list of businesses that have not complied with the Money Laundering Regulations 2017 (MLR 2017) for the tax year 2019 to 2020. Within this, it revealed that it has fined Touma Foreign Exchange Ltd £7.8 million for a wide range of serious failures under the Money Laundering Regulations. 

The Serious Fraud Office (SFO) was established to investigate and prosecute cases involving serious or complex fraud, a mission that inevitably leads it to the corporate sector. In 2010, it was given two significant tools in dealing with companies: a simple route to corporate criminal liability for bribery cases in the Bribery Act 2010 (the stick); and a means of incentivising a company fixed with corporate criminal liability to co-operate with the SFO by entering into a deferred prosecution agreement (DPA) and so avoiding a conviction (the carrot).

As the National Crime Agency (“NCA”) releases its 2019 National Strategy Assessment, NCA Director General Lynne Owens is calling for an extra £2.7 billion in law enforcement funding to combat serious and organised crime over the next three years. With 4,542 active UK-based organised crime groups and 181,000 UK people involved in serious and organised crime, law enforcement agencies are starting to creak under the strain. In this blog, we review the National Strategy Assessment’s analysis of current trends in financial offending and we look at the authorities’ response within their current funding arrangements. Against that background, we consider the argument for greater investment in law enforcement capacity.

New provisions introduced in September 2017 (under the Criminal Finances Act 2017(ss45-46)  to allow the prosecution of a company or partnership for failing to prevent its employees and other “associated persons” from facilitating tax evasion in the UK and abroad, were heralded as a game-changer in terms of reducing tax fraud and closing the tax gap (see our related blog - Will the new corporate offence of failure to prevent tax evasion and enhanced international tax transparency change the landscape for tax investigations?).

The Competition and Market Authority’s (CMA) Business Plan 2019-20 was presented as necessarily high level with a work programme and priorities contingent on the outcome of Brexit (see related blog: Brexit uncertainty pervades Competition and Markets Authority Annual Plan 2019-20).

In September 2018, the Court of Appeal handed down its judgment on ENRC’s appeal against Andrews J’s High Court decision in the case of The Director of the Serious Fraud Office v ENRC. The judgment has been praised for going some way to restore sense and order to the protection of legal professional privilege.

Shortly after the referendum result, I attended a meeting in Whitehall to which representatives of a wide range of criminal justice agencies had been invited. Our host, a policy official, told us that Brexit was to be viewed as an opportunity and asked us to identify the specific opportunities Brexit afforded us in our work. There was a stony silence; a tumbleweed moment. We all knew that, as the Institute for Government would later pithily observe, the UK would struggle to invent an arrangement on law enforcement co-operation with the EU that suits it better than the one it has now. What’s more, as matters stand, these arrangements will come to a grinding halt in little over a month. Where will that leave those agencies tasked with dealing with serious cross-border crime?

The Unexplained Wealth Order (UWO) has been available to law enforcement since February 2018. UWOs are intended to bolster the Proceeds of Crime regime, by making it easier for law enforcement agencies to seize assets suspected of representing criminal property.

At the end of 2018 the Government published its “ 1 Year Update” of the Anti-Corruption Strategy 2017-20 (“the Update”).  This report set out that “corruption and economic crime undermines our economy, damages our international reputation and communities.” It concludes that the Government’s “commitment and effectiveness” in this area is demonstrated by “the UK’s strong performance” in the independent review of money laundering and terrorist financing undertaken by the Financial Action Task Force and its top tier ranking in Transparency International’s Corruption Perceptions Index.

In December 2018, the Financial Action Task Force (FATF) published its report on the UK regime to counter money laundering (ML) and terrorist financing (TF). The report praises the strength of the UK regime, noting that the UK has a ‘robust’ understanding of ML/TF risk, and proactively investigates, prosecutes and convicts ML and TF. The report cites that the UK achieves “around 7900 investigations, 2000 prosecutions and 1400 convictions annually for stand-alone ML offences or where ML is the principle offence”.

At the end of last year the National Crime Agency published its annual report on Suspicious Activity Reports (SARs) for 2018. Media reporting (such as in the FT, subscription required), on the annual report has focussed, amongst other things, on the relatively small proportion of SARs made by lawyers. Is this a fair criticism and, if so, what is the reason for it?

The House of Lords Bribery Act committee inquiry heard evidence recently from Serious Fraud Office (“SFO”) Director Lisa Osofsky and Director of Public Prosecutions Max Hill QC. This was preceded earlier in the morning with an evidence session with Sir Brian Leveson, President of the Queen’s Bench Division, where the issue of Deferred Prosecution Agreements was the focus.

On 11 December 2017, the UK government published its five year Anti-Corruption strategy with the aims of preserving the UK’s status as “one of the safest and cleanest places in the world to do business", and “building a strong, confident Global Britain”.  Since 2010 the UK has taken significant steps to fight bribery and corruption, and is now ranked, according to Transparency International, as one of the ten least corrupt countries in the world. Notwithstanding this, money laundering and corruption remain a growing threat: the National Crime Agency estimates that over £90bn are laundered through the UK economy each year.

Last week, the CMA launched a new campaign to raise awareness of business cartels.  The campaign is designed to send a “tough message to business cheats” which features a cartels hotline and also includes potential financial rewards for those who report suspected cartels.

A number of provisions in the Financial Guidance and Claims Act 2018 (“the Act”) came into force on 1 October 2018, following the Act receiving Royal Assent on 10 May 2018.  Amongst other things, the Act transfers the regulation of Claims Management Companies (“CMCs”) from the Ministry of Justice (“MoJ”) to the Financial Conduct Authority (“FCA”) and imposes caps on the fees which CMCs can charge.  The FCA will take over regulation from April 2019.

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, Vivien Cochrane takes the compliance officer through the vagaries of British law, with a checklist for action at the end.