The people who designed and launched a unit-linked insurance product onto the market could be accountable under criminal law along with the individuals who distributed the policies – according to the Guidelines on conducting criminal investigations into financial crimes perpetrated using financial instruments and banking activity to the detriment of many victims (the “Guidelines”). The Guidelines that have recently been issued by The Polish General Prosecutor will serve as a manual for prosecutors on how to handle criminal irregularities on the financial market.
Under the Guidelines prosecutors are to provide an immediate response to financial crimes, ensuring a higher standard of prosecution and maintenance of law. From the very beginning of a prosecution all operational aspects of the financial institution’s activity should be examined, e.g. its organisational structure, responsibilities of employees, architecture of financial products, ML risks and the scale of the contested activity. In instances referring to unit-linked products it should be assessed whether the provisions of investment policies are purely a matter of civil law, or if they also enter into the regime of criminal law.
The Guidelines are expected to increase the efficiency of prosecutions brought against financial crimes and restore confidence in the financial market. As stated in the Guidelines, financial crimes tend to be the most serious offences nowadays. These offences are characterised by a high degree of social harm, and therefore penalties asked by prosecutors should be severe, dissuasive and considered on their own merits.
The Guidelines also recommend that charges should be brought as quickly as possible and efforts should be made to preserve evidence. Additional interim measures such as, for instance, seizure of assets should be considered in each case against the suspects.
The Guidelines are binding on the prosecutors. However, in many respects they contain a general wording that do not oblige prosecutors to achieve specific results or to perform particular actions. In the particular setting of unit-linked insurance products, we already indicated that each case requires a careful analysis and that one cannot be too hasty to assume the criminal liability of insurers in connection with the use of general terms and conditions which include, among others, surrender fees ( http://law-now.com/ealerts/2015/08/criminal-charges-for-management-boards-of-insurancecompanies?cc_lang=en ).
The most important impact of the Guidelines would be an increased scrutiny of the prosecutors over the financial market with criminal proceedings initiated against insurers. To prepare for this intense activity in respect of financial crimes, it may be reasonable to review beforehand the general terms and conditions and the practice of distributing policies in terms of criminal liability risks. The forthcoming criminal proceedings and criminal charges against managers or employees may also require thorough preparation on how to handle investigations and cooperate with the prosecutors’ office.
The full text of the Guidelines is available at: https://pk.gov.pl/plik/2016_08/acebffcbc913bec2b2846456a147551c.pdf