IP crime unit launched by City of London police
The City of London police have announced a new police unit to be launched to tackle intellectual property crime and online piracy. The Intellectual Property Office will provide £2.5 million in funding over two years to the City of London Police, which is the national lead force for fraud, to establish and run the unit. It is expected that the unit will be up and running in September. The unit will be one of the first units of its kind in the world.
TI letter to Prime Minister on potential Bribery Act review
Transparency International (TI) has written to David Cameron voicing concern over reports that the UK Government is considering a review of the Bribery Act only two years after its implementation. The letter warns that any watering down of the Act will undermine the goal it was designed to achieve. TI welcomed the Government's focus on tax transparency in the run up to the G8 summit, and asked that it extend the same focus to resist any pressures to dilute the Bribery Act.
Labour to increase SFO's powers and crack down on white collar crime
The UK's shadow attorney general, Emily Thornberry, has unveiled proposals aimed at increasing the resources available to the Serious Fraud Office (SFO) and introducing tougher criminal penalties. Ms Thornberry says the UK should strengthen its criminal penalty regime so it is "more in line with other jurisdictions". Labour also advocated removing the directing act and will test for the attribution of liability to corporate entities. The document, Tackling Serious Fraud and White Collar Crime, has been drawn up in preparation for Labour's 2015 manifesto and reflects the party's desire to raise its profile in combating corruption in the UK.
HMRC draft regulations for FATCA compliance
HMRC has published draft regulations for compliance with the US Foreign Account Tax Compliance Act (FATCA). The draft regulations are published alongside guidance notes, a tax information and impact note, and an explanatory webpage. The regulations are expected to come into force in mid-August and will apply to financial accounts (as defined in the legislation) held at 31 December 2013. For more information please see our blog post here.
Ofgem's new powers to investigate and enforce breaches of REMIT
On 6 June 2013, the Department of Energy and Climate Change (DECC) laid a draft Order before Parliament, which will grant Ofgem new powers to investigate and enforce breaches of the EU Regulation on wholesale energy market integrity and transparency (REMIT). Subject to the Parliamentary process, the Order is due to come into force on 29 June 2013. The order imposes new obligations on market participants to retain records of electronic and telephone communications and significantly augment Ofgem's existing enforcement powers. For a more detailed discussion of these proposals please see our briefing here.
DPAs: consultations on sentencing guidelines; DPA code of practice & criminal procedure rules
The legislative framework for DPAs can now be found in Schedule 17 to the Crime and Courts Act 2013 passed on 25 April 2013. Whilst a date has yet to be set for these provisions to come into force, the Serious Fraud Office expects DPAs to be available from February 2014. To this end, three consultations have been announced in preparation.
The first consultation, published by the Sentencing Council, invites comments on proposed guidelines in section nine applicable to fraud, bribery and money laundering committed by corporate offenders. Although Sentencing Council guidance is not a pre-condition for the provisions on DPAs entering into force, they are clearly crucial to a corporate entity's willingness to enter into DPA negotiations and to the prospects of agreement being reached on the terms of a DPA. This consultation is not confined to DPA sentencing and will therefore be of general relevance to companies.
The second consultation is the DPP and Director of the SFO's consultation on a draft "Deferred Prosecution Agreement Code of Practice". The consultation is open until 20 September and provides further detail on the necessary elements of a DPA, the procedures for obtaining judicial approval and for dealing with breaches and variations.
A third consultation has been published by the Criminal Procedure Rule Committee, on amendments to the criminal procedure rules to accommodate the proposed DPA process. The draft Code of Practice cross-refers to such rules, and therefore needs to be considered together with any proposed amendments to the Criminal Procedure Rules once published.
For a more detailed briefing please click here.
FCA thematic review of banks' control of financial crime in trade finance
The FCA has published a report summarising the results of its thematic review into banks' control of financial crime risk in trade finance. The report highlights areas of common weakness between the banks visited and also sets out examples of good and poor practice. It covers the following areas: governance and management information, risk assessment, policies and procedures, due diligence, training and awareness, money laundering controls, terrorist financing controls, and sanction controls including in relation to financing dual use goods. The main conclusion of the report is that the majority of banks in the sample, including a number of major UK banks, are not taking adequate measures to mitigate the risk of money laundering and terrorist financing in their trade finance business.
Further arrests in journalism bribery investigation
There have been seven further arrests this month in connection with Operation Elveden, an investigation into inappropriate payments made to police and public officials by journalists. Two journalists from the Sun have been charged, along with a former health care assistant at the Broadmoor high-security psychiatric hospital, with conspiring to commit misconduct in a public office. It is alleged that they paid public officials for information on psychiatric patients as well as a member of the Royal family. So far 69 people have been arrested in connection with the phone hacking investigation.
Recent sanctions cases
The Supreme Court has ruled (Bank Mellat v HM Treasury (No. 2)  UKSC 39) that an order made by HM Treasury (HMT) in 2009 to restrict the access of Bank Mellat to the UK financial markets on account of its alleged connection to Iran's nuclear weapons and ballistic missile programme was unlawful. In 2009 HMT made an order under the Counter Terrorism Act 2007, prohibiting 'all persons operating in the financial sector’ from ‘entering into, or … continuing to participate in, any transaction or business relationship’ with Bank Mellat.
The order has been quashed by the Supreme Court on both substantive and procedural grounds. The majority found that:
- the order was disproportionate and discriminatory in that HMT's concerns were not specific to Bank Mellat but an inherent risk of banking, and the risk posed by Bank Mellat’s access to those markets was no different from that posed by other comparable banks. The direction was irrational in its singling out of Bank Mellat and disproportionate to the statutory objective of hindering Iran's nuclear programme
- Bank Mellat was not given notice of HMT's intention to make the direction and therefore had no opportunity to make representations as required by common law and the ECHR Art 6, and Protocol 1 Art 1.
The High Court recently granted summary judgment in Melli Bank Plc v Holbud Ltd  EWHC . Holbud (a customer) had refused to pay Melli Bank sums due under a facility agreement on the basis that it had become the subject of EU restrictive measures against Iran in 2008. Holbud argued that the Bank's listing frustrated the contract and that payment would be illegal as a result. The Commercial Court rejected this argument and granted summary judgment for the bank; designation did not render obligations under a facility agreement incapable of performance as the customer could have sought a licence from HMT to permit the payments due under the contract and Holbud had not done so. Further, the bank's designation did not constitute a repudiatory breach.
MP accused of selling parliamentary passes
British MP Patrick Mercer is alleged to have offered a journalist, who was posing as a lobbyist, a Parliamentary pass for £2,000. Mercer is also alleged to have agreed to take money in order to produce a Parliamentary report. In total Mercer received over £4000, half of which he failed to declare according to the Parliamentary rules. Patrick Mercer has resigned from the Conservative party and said he would stand down at the next election; he has referred himself to the Parliamentary Standards Committee and is said to be receiving legal advice.