SFO speech at Herbert Smith Freehills' Corporate Crime Conference 2018
The SFO has published a speech delivered by Camilla de Silva, Joint Head of Bribery and Corruption, at Herbert Smith Freehills' Corporate Crime Conference 2018. In her speech, Ms de Silva discussed the SFO's views on corporate criminal liability, where she described the current law relying primarily on the identification principle as an inadequate model for attribution to a corporate of criminal liability. She also discussed Deferred Prosecution Agreements (DPAs) and the use of compliance monitors, the use of artificial intelligence and technology, as well as legal professional privilege.
Proposed amendments to the EU Blocking Statute
In May, we published an e-bulletin discussing President Trump's announcement that the United States would withdraw from the Iran nuclear deal (the Joint Comprehensive Plan of Action – "JCPOA"), and that all pre-JCPOA nuclear-related sanctions on Iran (including secondary sanctions) would be re-imposed.
The European Union, along with leaders of the other countries party to the JCPOA (Germany, France, the United Kingdom, Russia and China) have all reiterated their commitment to the JCPOA. On 18 May, the European Commission announced in a press release that it had taken (or will continue to take) the following four steps to continue the full and effective implementation of the JCPOA:
- launched the formal process to activate Council Regulation (EC) No 2271/96 (the "Blocking Statute") by updating the list of US sanctions on Iran falling within its scope;
- launched the formal process to remove obstacles for the European Investment Bank to decide under the EU budget guarantee to finance activities outside the European Union, in Iran;
- continue and strengthen the ongoing sectoral cooperation with, and assistance to, Iran, as confidence building measures; and
- encourage Member States to explore the possibility of one-off bank transfers to the Central Bank of Iran.
Please click here for our full briefing where we provide a summary of the provisions of the Blocking Statute and commentary on the potential conflicts which arise as a result of the proposed amendments.
GIR Due Process Guide 2018
Global Investigations Review (GIR) has launched its Due Process Guide for 2018 which seeks to assess the standards of 39 government enforcement agencies around the world. Agencies receive gradings from A+ to C-, assessing the methods they use to achieve their results. Some of the results include the following:
Germany's Public Prosecutor's Office is the only body to have received an A grade this year; Hong Kong's Securities and Futures Commission (SFC) was marked down to an A-, in part due to lawyers complaining about its aggressive stance to legal privilege and rules related to compelled interviews; Japan's Public Prosecutor's Office and Sweden's Public Prosecution Office, as new entries, scored grades of C and B, respectively; For the third year running, China's State Administration for the Industry & Commerce had the lowest grade on the list; The Australian Securities and Investment Commission (ASIC) jumped from B to B+, while the Australian Public Prosecutor's Office received a mark-down, dropping to B+ as lawyers expressed their concerns about a lack of prosecutorial independence; and The UK's SFO kept its score of B+.
FATF-MENAFATF joint plenary outcomes The Financial Action Task Force (FATF) with the Middle East and North Africa Financial Action Task Force (MENAFATF) have published the outcomes of their joint plenary, held on 27 - 29 June 2018. The meeting was chaired by FATF President, Otamendi of Argentina and MENAFATF President Abdul Hafiz Mansour. Amongst other things, the plenary discussed the following:
Brazil’s progress in addressing the deficiencies identified in its mutual evaluation report since it agreed to an action plan in November 2017; Monitoring Iran’s actions to address deficiencies in its AML/CFT system; and FATF’s work programme on virtual currencies/crypto-assets.
New study finds £12 trillion in global investments are held in off-shore corporate shells
Research published by the International Monetary Fund (IMF) has found that multinational companies have invested £12 trillion globally in "empty corporate shell" companies located in tax havens and that oil-producing and politially unstable countries hold a disproportionately large share of the $7 trillion of personal wealth located in tax havens. The research correctly recognises that the use of pass-through entities in lower tax jurisdictions does not in itself imply tax avoidance or evasion, but highlights the risk of such conduct and suggests that better data on the scale of investment through tax havens will help inform the cost/benefit analysis on the best approach to tax enforcement. Please click here for the full report.
Call for evidence and memorandum for inquiry into the Bribery Act 2010
The House of Lords Select Committee on the Bribery Act 2010 has called for evidencefor a post-legislative scrutiny inquiry into the Bribery Act 2010. The inquiry seeks to examine the effectiveness of the Bribery Act 2010 and its impact on small-medium enterprises (SMEs). It will also examine DPAs in this context. A scrutiny memorandumhas also been published which summaries the provisions and implementation of the Bribery Act 2010. The deadline for submissions of evidence to the inquiry is 31 July 2018.
European Commission report on restricting cash payments to aid CTF and AML
The European Commission has published the findings of a study assesssing the potential impact of restrictions on cash payments on illicit activities and on the internal market. The study concluded that cash restrictions would not significantly address the problem of terrorism financing and that the ineffectiveness of such measures stemmed from the fact that transactions targeted under these objectives would either be of a value too low to be covered, or would already be illegal, such that an additional prohibition would have little impact.
Preliminary findings of the study also indicated that prohibiting high value payments in cash could have a positive impact on the fight against money laundering. It was also found that restrictions on payments in cash could possibly have an indirect impact on predicate criminality.
Council of the EU agrees to new rules on freezing and confiscation orders
The Council of the European Union has agreed to new rules in the form of a regulation concerning the mutual recognition of freezing and confiscation orders across the EU. The main features of the new rules include:
A new regulation directly applicable in the EU, covering freezing and confiscation orders; A general principle of mutual recognition, ensuring judicial decisions in criminal matters are recognised and enforced by other member states; Varied types of confiscation in criminal matters such as value based confiscation and non-conviction based confiscation; Standard certificates and procedures to allow for speedy and efficient freezing and confiscation actions; A deadline of 45 days for the recognition of a confiscation order and in urgent cases a deadline of 48 hours for the recognition and a further 48 hours for the execution of freezing orders; and Provisions to ensure that victims' rights to compensation and restitution are respected in cross-border cases.
The Fifth Money Laundering Directive
On 7 June 2018, the Council of the European Union agreed to a proposal for a Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
The main changes to directive 2015/849 (the so-called Fifth Money Laundering Directive) involve:
- broadening access to information on beneficial ownership, improving transparency in the ownership of companies and trusts;
- addressing risks linked to prepaid cards and virtual currencies;
- additional requirements in relation to cooperation between financial intelligence units;
- improved checks on transactions involving high-risk third countries.
On 19 June 2018 the final text for directive was published. EU member states have 18 months to transpose the Fifth Directive into national law, though some member states have already done so.
Joint general principles to compensate victims of economic crime
An agreement between the Crown Prosecution Service (CPS), the National Crime Agency (NCA) and the SFO has been established to create a common framework to identify cases where compensation from economic crime for overseas victims, is appropriate. To access the general principles, please click here.
Europol's 5th Virtual Currencies Conference
Europol held its 5th Virtual Currencies Conference between 19 and 21 June where over 300 participants from 40 countries met to discuss virtual currencies and how to foster their legitimate use (in circumstances where they are often abused by hackers, criminals and money launderers). The 2018 presentation focused on tracing, attribution and demixing as ways to encourage legitimate uses of virtual currencies.
Banking Protocol prevents fraud worth £24.7 million in its first year
UK Finance has announced that the Banking Protocol, a rapid response scheme aimed at identifying and protecting potential fraud victims when they visit a bank or building society branch, has led to 197 arrests and prevented almost £25 million of attempted fraud in its first year. The Banking Protocol enables bank branch staff to contact police if they suspect a customer is in the process of being scammed, with an immediate priority response to the branch. 3,682 emergency calls have now been placed and responded to, with the average prevention per call equating to £6,720.