NCA secures first Unexplained Wealth Orders The Criminal Finances Act 2017 received royal assent on 27 April 2017. It confers new powers on UK authorities to tackle money laundering and corruption, recover the proceeds of crime and counter terrorirst financing (for further details please click here).   The Act introduced a new investigative tool, an unexplained wealth order (UWO) which enables certain law enforcement authorities to apply to the High Court for an order requiring a respondent to provide information about how specified property was acquired. These provisions came into force on 31 January 2018. Further information about a UWO is available on our blog post.  The National Crime Agency (NCA) has now obtained its first UWOs, to investigate assets with an estimated value of £22 million. It has been reported that the UWOs relate to two properties believed to be beneficially owned by a politically exposed person (PEP).

These are the first UWO orders to be granted and therefore the first time the legislation has been tested in court. In addition to the UWOs, interim freezing orders (IFOs) were granted, meaning that assets cannot be sold, transferred or dissipated while subject to the order.

SFO in talks to increase annual budget  It has been reported that the Serious Fraud Office (SFO) is in discussion with HM Treasury (HMT) regarding its annual budget. At present, its annual budget is £31 million and funds 500 staff. The SFO typically requests extra "blockbuster" funding where necessary, when it takes on larger cases. It has reportedly received more than £100 million in top up funding to support recent large-scale investigations. It appears that the question of the appropriate balance between regular and blockbuster funding is the subject of renewed debate.

SFO speech on investigative techniques, corruption and DPAs  The SFO has published a speech delivered by its Joint Head of Bribery and Corruption, Camilla de Silva, at the ABC Minds Financial Services conference held earlier this month. In her speech, Ms de Silva noted the importance of the SFO working globally with other bodies in order to strengthen operational cooperation and the exchange of ideas such as Deferred Prosecution Agreement (DPA) regimes and how they are suitably adapted into other jurisdictions. She explained that the SFO's priority is to investigate and, if appropriate, prosecute top end financial crime, not to focus efforts on issues such as market stability or standards. She also discussed investigative techniques used by the SFO which include the sharing of knowledge across industries and the continued use of artificial intelligence (AI), such as in the privilege review of documents in the Rolls-Royce case.  In relation to the use of DPAs, Ms de Silva noted that the SFO will consider the Code of Practice and assess whether a defendant company has self-reported, remediated and cooperated with the SFO. She emphasised that cooperation relied on the timing of first contact with the SFO, the quality of an internal investigation, and the approach of the defendant company going forward. She also noted that neither cooperation in itself, nor an impression of it, is enough to secure a DPA, and DPAs are not intended for corporates that the SFO deems as likely to re-offend. Ms de Silva also briefly discussed the role of the SFO in investigating and prosecuting under the new Failure to Prevent the Facilitation of Tax Evasion offence.

Company found guilty of failure to prevent bribery: R v Skansen Interiors Ltd

In a recent reported case, a UK company, Skansen Interiors Limited (SKI) became the first to be directly prosecuted in the first contested prosecution of a company for failure to prevent bribery, an offence under section 7 of the Bribery Act 2010 (there have been previous DPAs and a guilty to a Section 7 offence.

Reportedly, the company was prosecuted by the Crown Prosecution Service (CPS) notwithstanding that its new CEO stopped the first part of the agreed bribe being paid and self-reported the conduct, and that the company was dormant by the date of the prosecution. The case is of some interest in addressing the difficulties a company may have in proving it had "adequate procedures" to prevent bribery, but may in the long run have more lasting effect as a deterrent to self-reporting, a message which cuts across the SFO speech referred above. As the company was dormant at the time of sentencing, it received an absolute discharge.

FCA updated webpage on whistleblowing The Financial Conduct Authority (FCA) has substantially altered and updated its webpage on whistleblowing. To view this, please click here.

FCA places firms in insolvency  The FCA has imposed restrictions and placed two firms into insolvency, following assessment of their financial positions and concerns that they may be involved in financial crime. The FCA is assisting the US Department of Justice (DOJ) with its separate investigation into one of the firms. 

HMT issues advisory notice on enhanced due diligence requirement for higher risk jurisdictions The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 require the UK regulated sector to consider jurisdictional risk in assessing the extent of counter and enhanced due diligence measures. In response to recent statements from the Financial Action Task Force (FATF), HMT has issued an updated advisory notice in relation to high risk jurisdictions which can be found here.  

HMT call for evidence on cash and digital payments in the new economy HMT has launched a call for evidence on the role of cash and digital payments in the new economy. HMT is seeking to gather evidence on how the transition from cash to digital payments is impacting different sectors, and on how the government can support digital payments and ensure that the ability to pay by cash is available for those who need it, whilst combating the minority who use cash to evade tax and launder money. Responses are requested by 5 June 2018.  

HMT supervision report 2015-17: Anti-money laundering and counter-terrorist financing  HMT has published its supervision report of 2015-2017 on anti-money laundering (AML) and counter-terrorist financing (CTF). The report covers activity undertaken by statutory supervisors (the FCA, HMRC and the Gambling Commission) and by the legal and accountancy sector professional body supervisors between 2015 and 2017 and analyses different aspects of the supervisory regime with quantitative and qualitative data and case studies. 

HMT/OFSI updated guidance: Financial sanctions  HMT's Office of Financial Sanctions Implementation (OFSI) has published updated guidance on financial sanctions. The updated sections of 3.4.1 and 3.4.2 relate to the provision of legal advice to designated persons, and specifically the circumstances in which a licence is required in order to provide legal advice to a designated person, and to allow for payment.  

OFSI launches blog  OFSI has launched a blog to raise awareness of financial sanctions. Initial posts include an introduction to OFSI, an overview of current financial sanctions regimes and the North Korea financial sanctions regime.

JMLSG proposed revisions to asset finance and syndicated lending  The Joint Money Laundering Steering Group (JMLSG) has published proposed revisions to two of the sectors in Part II of its guidance on the prevention of money laundering and the financing of terrorism for the UK financial services industry. The proposed revisions, to sector 12: Asset finance, and sector 17: Syndicated lending, seek to describe in more current terms the way the sectors work, how to assess the risks in the sectors and how to identify who customers are. Responses to the proposals are requested by 30 March 2018.

Theresa May announces amendment to Sanctions and AML Bill for banks  Theresa May has announced a tabling of a "Magnitsky" amendment to the Sanctions and Anti-Money Laundering Bill currently in Parliament. It appears that the amendment may expand the grounds pursuant to which sanctions may be imposed on particular individuals and countries; these provisions are in any event the subject of the table of amendments which have been settled as the Bill progresses through Parliament.

SRA thematic review of AML compliance in law firms  

The Solicitors Regulation Authority (SRA) has published its thematic review of AML compliance in large and small law firms. Following the introduction of the Money Laundering Regulations 2017 (MLR 2017) on 26 June 2017, the SRA began assessment of 50 different law firms to examine their AML and CTF processes and procedures. The newly implemented MLR 2017 requires relevant firms to adopt a greater risk based approach to AML and CTF compliance. The new requirements are also more prescriptive and firms must make sure that decisions and policies are recorded in writing. In summary, the SRA's review found that although most law firms are doing what is needed to tackle money laundering, some need to do more; the SRA noted strong action taken against 49 solicitors, and eight law firms closed down in the last three years. Despite being a requirement, only a third - 17 firms - had a firm-wide risk assessment in place or were in the process of implementing one. The SRA also noted its concerns about the processes and practices of six of the firms reviewed who are now facing disciplinary action. The full report can be accessed here.

Finance Bill 2018 receives royal assent  The Finance Bill 2018 received royal assent on 15 March 2018 and is now an Act of Parliament. The Act, amongst other things, seeks to tackle tax avoidance, evasion and non-compliance, and is thereby expected to help raise an additional £1.2 billion for the UK Government. In relation to offshore trusts, the Act introduces anti-tax avoidance measures designed to ensure that domestic tax reforms are not circumvented.

The Proceeds of Crime Act 2002 (References to Financial Investigators) (Amendment) (England and Wales) Order 2018  The Proceeds of Crime Act 2002 (References to Financial Investigators) (Amendment) (England and Wales) Order 2018 (the Order) has been laid before Parliament. The Order gives police officers, immigration officers, officers of HMRC and officers of the SFO (and, in certain circumstances, NCA officers) access to certain powers under the Proceeds of Crime Act 2002 (POCA). The Order will come into force on 17 April 2018. A supplementary explanatory note has also been published by the Government.

The Crime and Courts Act 2013 (Deferred Prosecution Agreements) (Amendment of Specified Offences) Order 2018  The Crime and Courts Act 2013 (Deferred Prosecution Agreements) (Amendment of Specified Offences) Order 2018 (the Order) has been laid before Parliament and approved by resolution of each House of Parliament. The Order removes the offence under section 397 of the Financial Services and Markets Act 2000 from Part 2 of Schedule 17 to the Act (offences in relation to which a DPA may be entered into), and includes the offences under sections 89, 90 and 91 of the Financial Services Act 2012 instead. The Order came into effect on 21 March 2018 and is accompanied by an explanatory memorandum

MEPs nominated for new financial crimes committee  The European Parliament has announced that Members of the European Parliament (MEPs) have approved the nomination of 45 members to the new Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance. The work of the Committee, which has a 12-month mandate, will include examining "national schemes providing tax privileges", VAT fraud, ensuring tax compliance in the digital economy, and assessing the Commission’s own assessment and screening process for listing countries as high-risk third countries under the Fourth Money Laundering Directive (4MLD). The Special Committee held its first meeting on 22 March 2018, where members selected a chair, vice chairs and rapporteurs.