As the dust settles on the UK’s vote last week to leave the EU, it is becoming clear that the key to understanding the implications will be the terms of our new trading relationship with the EU and of any trade deals we are able to strike with other countries. What is also clear is we are likely to wait some time for the full picture to emerge. However, the general UK policy aim of holding businesses and individuals to account for corporate crime wherever it occurs may – and perhaps should – mean that we will ultimately see little change in this area.
The Brexit position will largely depend on whether the UK remains a member of the European single market. Financial institutions looking to trade into Europe will almost certainly have to continue to meet EU regulatory requirements.
Bribery and corruption
The Bribery Act is UK specific and its extraterritorial effect will be unaffected by Brexit.
The UK regime ultimately derives from international obligations commonly implemented in the EU. The UK has recently been looking to carve out a role as global leader in this area. Brexit is therefore unlikely to have significant impact.
Cross-border regulatory and criminal investigations and enforcement
EU cross-border cooperation regimes would need to be replaced with bi-lateral agreements with the EU or individual member states. The current UK/US relationships between the FCA/SEC and SFO/DoJ demonstrate that these can work very well. We expect that new arrangements would largely mirror those currently in force.
The UK would benefit from seeking to maintain a similar regime to the European Arrest Warrant, to assist with the extradition of EU nationals to the UK for prosecution.
Cybersecurity, including cybercrime, is identified as one of the government’s key national risks, and is likely to remain so for some time. Information-sharing arrangements between governmental agencies and investigatory bodies are therefore likely, to the extent necessary, to be replaced by bi-lateral or multi-lateral arrangements which mirror the current position. The government’s next 5-year cybersecurity strategy, due to be published shortly, is unlikely to be impacted by Brexit.
The UK has been a key driver of EU sanctions over recent years, and is likely to look to continue its role in international sanctions after Brexit. The EU and U.S. have both imposed sanctions in recent years which go further than those required by the United Nations Security Council. The EU and U.S. have taken slightly different approaches, and it remains to be seen whether we will see a shift in UK policy towards the U.S. approach after Brexit or whether the UK will continue to act in concert with the EU.
There are perhaps two general points to finish on. First, many commentators predict that Brexit will lead to an economic downturn. Such events, depending on their duration and severity, tend to lead to a rise in fraud and business misconduct. Second, if the UK finds itself trading more with non-EU markets, it may find more of its trade is with countries with greater corruption risk. Both points illustrate that Brexit ought not to diminish efforts to prevent and detect corporate crime from happening in your organisations.