Rise in HMRC dawn raids to combat tax evasion
HM Revenue and Customs ("HMRC") has released information which shows that the number of raids on premises of businesses and individuals carried out by HMRC as part of its programme to combat tax evasion has increased by 34% over the last five years, from 499 in 2012 to 996 in 2017. The total number of raids, including those targeting illegal trading of cigarettes and alcohol and benefit fraud, has risen by 8% from 1,449 in 2016 to 1,563 in 2017. Recent high profile dawn raids have taken place at leading football clubs and were reported to be part of a large cross-border investigation. It has been suggested that the number of dawn raids is further set to increase as the Criminal Finances Act 2017 introduces the offence of Failure to Prevent the Facilitation of Tax Evasion, which will come into force 30 September 2017. For further information on the Criminal Finances Act 2017, please click here and here.
Organisations to face fines for cyber security failures under new government plans
The Department for Digital Culture, Media and Sport ("DCMS") has launched a consultation on the Security of Network and Information Systems Directive. The consultation includes various proposals and introduces powers to fine firms performing 'essential services' with insufficient cyber security up to £17 million or 4% of their global turnover, as part of government plans to improve security and resilience against cyber-attacks. The proposed reform follows the recent malicious ransomware attack on the NHS and a major IT failure at British Airways. Various security measures are proposed by the government. Fines have been stated to be a last resort and will not apply to operators of 'essential services' that have assessed risks adequately, taken appropriate security measures and engaged with competent authorities, but still suffered an attack. Comments in response to the consultation must be submitted by 30 September 2017.
New sanctions reporting requirements for non-financial sector businesses
With effect from 8 August, the Government introduced significant new reporting requirements in relation to EU asset freeze regimes. Previously, only businesses in the financial sector were subject to the obligations, found in UK financial sanctions instruments, to report specified information to the Office of Financial Sanctions Implementation ("OFSI") in Her Majesty's Treasury ("HMT"). From 8 August, further sectors, including auditors, external accountants, tax advisers and lawyers, have been brought within the scope of these obligations and may commit a criminal offence if they fail to comply with the relevant reporting requirements.
The European Union Financial Sanctions (Amendment of Information Provisions) Regulations 2017 (the "Regulation") implements this change, and applies in respect of information received on or after 8 August.
OFSI has updated its guidance (the "Guidance") on financial sanctions to take account of this change. A number of other amendments have also been made to the Guidance. For further details please see our e-bulletin.
FCA publishes answers to outstanding questions
The FCA has published written answers to questions which were asked in advance of, but not answered at, the FCA annual public meeting. Topics covered include:
- Brexit and its impact on financial services in the UK;
- the extended Senior Managers regime;
- the review of the Consumer Credit Act;
- the FCA's supervisory and enforcement approaches;
- competition in the credit rating agency market;
- claims management company regulation;
- the retail advice market;
- cyber risk;
- the asset management market study;
- the regulation of crowdfunding;
- the regulatory framework for foreign exchange (Forex); and
- the insurer/managing general agent (MGA) distribution chain.
Herbert Smith Freehills assists with first prevention of corruption clause in Olympic Games host city contract
Sylvia Schenk, a consultant in Hebert Smith Freehills' Frankfurt disputes team, has worked with global anti-corruption non-governmental organisation Transparency International to secure the first prevention of corruption clause in an Olympic Games host city’s contract. The International Olympic Committee ("IOC") announced on 31 July that the 2028 games would go to Los Angeles. Although the contract must be ratified by the full IOC membership in September, the IOC has, for the first time, included an anti-corruption clause in the contract accepted by the city. The document includes mandates for nondiscrimination, protection of human rights and prevention of fraud or corruption “including by establishing and maintaining effective reporting and compliance.” For further details, please click here.
SFO earns taxpayers £517 million in 12 months
The Serious Fraud Office ("SFO") has published its annual report in July 2017. This sets out that its net revenue for the year to April 2017, which was paid into the Treasury, totalled £516.7 million. The revenue equates to more than the total cost to run the organisation over the last decade, which stands at £473 million. The annual report also reviews deferred prosecutions agreements (DPAs) and changes in governance arrangements within the organisation.
FCA publishes report on new technologies and AML compliance
The FCA has published a report on emerging technologies and their adoption by the financial industry to tackle anti-money laundering requirements. The report details research conducted over three months, including over forty interviews with regulated firms, technology providers, and other bodies.
Individual arrested on suspicion of cryptocurrency fraud
An individual has been arrested on suspicion of establishing a 'boiler room' to sell non-existent cryptocurrencies to investors. The City of London Police Fraud Squad began investigating after reports were made to Action Fraud, the UK’s national fraud and cybercrime reporting service. Currently, nine reports have been made to Action Fraud with total loss to victims estimated to be at £160,000.
CMA consultation on revised penalties guidance
The Competition and Markets Authority ("CMA") has launched a consultation on draft revisions to its guidance on the appropriate level of penalty for breaches of competition law. The proposed changes include provision of further detail around the assessment of seriousness of infringements, provision of some illustrative mitigating and aggravating factors and the application of discounts where the CMA considers approving voluntary redress schemes. Comments on the consultation must be submitted by 27 September 2017.