DPA approved by UK Court

A UK Court has approved a Deferred Prosecution Agreement (DPA) between the SFO and Standard Bank Plc over an alleged failure to prevent bribery contrary to section 7 of the Bribery Act 2010. The SFO alleged that the bank failed to prevent two senior executives of its former sister company engaging a local partner with the intent that the engagement would induce Tanzanian government representatives to award a capital raising mandate to the bank and its sister company.

Herbert Smith Freehills' global anti-corruption report released  

HSF has launched the first global edition of our Anti-Corruption Report, reviewing a year in which corruption investigations have never been far from the headlines. Since the first edition of our Asia Anti-Corruption report was published three years ago, it has generated considerable interest amongst clients, regulators, enforcement agencies and the media. Compiled by members of our global team across our network of international offices, we have combined international experience with our understanding of local anti-corruption trends to bring to market a unique publication. This edition touches on investigations, reforms and perceptions in close to 100 countries. It also summarises the key long-arm statutes, the US Foreign Corrupt Practices Act and the UK Bribery Act, and how they have been deployed in the past year against companies and individuals across the globe.

For a copy of this report, please email [email protected].

Sweett Group admits failure to prevent bribery in relation to contracts in the Middle East

Sweett Group has agreed with the UK Serious Fraud Office to plead Guilty to a section 7 offence under the Bribery Act of failing to prevent bribery.  The offence relates to Middle East contracts entered into by Sweett group in 2013.

Sweett Group commissioned an investigation by external lawyers last year to look into allegations of bribery first reported in the press in 2013.  In the course of that investigation, lawyers identified separate incidences of corruption, which were reported to the SFO.  The SFO announced in July 2014 that it had opened an investigation into the company's activities in the United Arab Emirates and other jurisdictions.  Sweett Group has now admitted an offence and announced that it has agreed to plead guilty at a future court date, to be scheduled.

This is likely to be the first prosecution for a section 7 offence, as well as the first guilty plea.

UK Court orders disclosure of confidential SFO and client documents: Harlequin Property (SVG) Ltd & Anor v Wilkins Kennedy  

The recent case management decision in Harlequin Property (SVG) Ltd and Another v Wilkins Kennedy [2015] EWHC 3050 (TCC) considered an application by the Defendant to withhold documents from inspection on the basis of confidentiality. The documents in question fell into two categories, namely: (i) documents created in the course of an investigation into the Claimants by the SFO (the SFO joined with the Defendant to bring this application); and (ii) documents that were confidential to the Defendant's third party clients.  

The Court refused the Defendant's application to withhold either category. In a short judgment, Mr Justice Coulson explained his rationale that:  

  1. In this highly contentious case, the administration of justice and need to dispose fairly of the issues outweighed any public interest in withholding the documents generated by the SFO investigation; and  
  2. In relation to documents containing confidential information of third party clients:  
    1. Where the clients in question were involved in the critical issues in dispute, there would be a real risk that these issues could not be disposed of fairly without inspection of these documents; and

    2. Even where the clients in question were unrelated to the case, the entire group of documents should be offered for inspection notwithstanding that it was "highly likely" they would be irrelevant. This approach was said to be justified on an "entirely pragmatic" basis, if the documents were indeed irrelevant then there would be no prejudice caused (save for costs, which could be dealt with by way of costs order).

To read more about the decision, click here.  

Bank fined in respect of financial crime risks  

The FCA has fined a bank for poor handling of financial crime risks in relation to a large transaction involving a number of politically exposed persons.  Although the FCA did not find that the transaction actually involved financial crime, the bank had not followed its standard procedures for the transaction.‎ The fine includes disgorgement of the revenue generated by the transaction.  

HMT quarterly report on financial sanctions  

HM Treasury (HMT) has published its quarterly report to Parliament on its operation of the UK's asset-freezing regime. Under the Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010), HMT is required to report to Parliament, quarterly, on its operation of the UK’s asset freezing regime mandated by UN Security Council Resolution (UNSCR) 1373. The report, which covers the period from 1 July to 30 September 2015, also covers the UK implementation of the UN Al-Qaida asset freezing regime and the operation of the EU asset freezing regime in the UK, which implements UNSCR 1373 against external threats to the EU. The report sets out the key asset freezing exercises in the UK during the quarter ending September 2015 and is accompanied by Annexes, which set out, by name, a list of designated persons.

PCaW launches Whistleblowing Best Practice Guide and Report  

Public Concern at Work (PCaW) has launched a Best Practice Guideand Report on whistleblowing. The Guide and Report are based on insights from organisations that signed up to the PCaW First 100 campaign and that are implementing the Whistleblowing Commission's Code of Practice. The organisations responded to questions regarding the promotion of their whistleblowing arrangements, any corresponding trends in their use, the commitment shown by senior staff, any review work undertaken, difficulties with implementing the Code effectively and aspirations for the campaign going forward. The report also provides a summary of recommendations for implementing the Code of Practice effectively.

Rob Gruppetta speech on anti-money laundering regulations  

Rob Gruppetta, Head of the Financial Crime Department at the FCA, has given a speech entitled "Examining the future of anti-money laundering regulations". Mr Gruppetta discussed the Fourth Money Laundering Directive, the FCA's recent consultation on financial crime data return, the relationship between financial crime and the Senior Managers Regime, derisking, innovation and enforcement.  

Cybersecurity Directive – text provisionally agreed  

The European Parliament, the Council of the European Union and the European Commission have agreed on the first EU-wide legislation on cybersecurity. The aim of the directive is to improve cybersecurity capabilities in Member States and to improve Member States' cooperation on cybersecurity. The directive will require operators of essential services in the energy, transport, banking and healthcare sectors, and providers of key digital services like search engines and cloud computing, to take appropriate security measures and report incidents to the national authorities.  

The presidency is due to present the agreed text for approval by the member states' ambassadors at the Permanent Representatives Committee on 18 December 2015. The Parliament and the Council will then still have to approve the text formally before it can enter into force. Member states will then have 21 months to implement the directive into their national laws.  

FATF report on money laundering  

The Financial Action Task Force (FATF) has published a report on money laundering through the physical transportation of cash. The report is intended to develop the knowledge base about the methods and trends used by criminals to smuggle cash in order to further inform policy work in the area.  The key findings of the report include:  

  • The use of physical transportation of cash distances the criminal proceeds from the predicate offence that generated them, and breaks audit trails;
  • The amounts of cash being concealed in cargo and adapted freight are far in excess of what can be carried by a natural person;
  • The currencies most frequently encountered in consignments of criminal cash – the US dollar, the euro, the British pound, the Swiss franc, etc. – are the most stable, widely used and readily traded in the world;
  • High-denomination notes are often used to reduce the bulk and weight of criminal cash when concealment of the cash is a prerequisite to smuggling it;
  • Mechanisms of cash declaration systems are regularly exploited, particularly as a method of lending a veneer of legitimacy to criminal cash introduced into the legitimate financial system.
  • Most countries have little appreciation of the legitimate movement of cash by cargo and mail.  Many jurisdictions consider their obligations to be limited to having in place a disclosure or declaration system for transportation of cash by network persons only.  This can significantly hamper efforts to identify consignments on criminally derived cash.

CGD Working Group report on money laundering  

The Centre for Global Development's Working Group has published a report on the unintended consequences of anti-money laundering policies for poor countries. The report sets out how the policies that have been put in place to counter financial crimes may also have unintentional and costly consequences, in particular for people in poor countries. The report is concerned by banks "de-risking" by ceasing to engage in types of activities seen as higher risk in a "wholesale" fashion, rather than judging the risks of clients on a case-by-case basis. Consequences identified include remittance corridor closures, elimination of correspondent banking relationships and increased difficuly in the delivery of humanitarian aid.  The report considers the available evidence, and makes five recommendations to:  

  • Rigorously assess the unintended consequences of AML/CFT and sanctions enforcement at the national and the global level;
  • Generate better data and share data;
  • Strengthen the risk-based approach;
  • Improve compliance and clarify indicators of lower risk; and
  • Facilitate identification and lower the costs of compliance.