Regulatory Outlook | Anti-bribery, Corruption and Financial Crime | January 2018

Current issues

New look SFO

A new Director will be in place in April 2018, replacing David Green CB QC, and the agency will now be subject to “direction” from a newly created National Economic Crime Command Centre within the National Crime Agency. What that might mean in practice is uncertain, but both developments will be keenly watched to determine the future direction of travel for the SFO.  We anticipate that the SFO, in conjunction with other agencies, will seek to enhance its enforcement capabilities in the corporate world.

Headline charging decisions

A likely barometer in this regard may well be seen in the pending decisions to be taken by the SFO in relation to a number of high profile corporate crime cases, including: Airbus, GlaxoSmithKline, Rolls-Royce and Serco/G4S. These may prove indicative of more aggressive enforcement against corporates and senior executives, which we expect will be a trend in 2018.

Tax evasion

Consistent with this approach, we believe that HM Revenue & Customs will also be keen to bring the first prosecutions utilising the failure to prevent the facilitation of tax evasion offences, which have now been in force since 30 September 2017. HMRC often adopts a policy of high profile prosecutions in particular sectors, to “incentivise” compliance from other companies; this approach may be adopted here.

FCA enforcement

The FCA has not, to date, focussed on the new failure to prevent facilitation of tax evasion offence. It is mooted that this will change in 2018 and that the FCA will conduct a tax evasion thematic review, although the impact of any such review may not be apparent until later in the year, or beyond. We also believe that we may see a continued uptick in FCA insider dealing investigations over the course of the year.

New offences

Consideration is being given by legislators to the possibility of introducing a broad corporate offence of failing to prevent economic crime, including fraud and money laundering. This has been discussed previously and although then discounted by the government, following lobbying from relevant parties, and in particular the SFO, the issue is once again under consideration.   An alternative is also being considered, which whilst more limited, may prove to be more realistic. This would see a further corporate offence being enacted but limited to the failure to prevent money laundering. In either event, it will be a further strict liability offence (mirroring the Bribery Act), aimed at making it easier to prosecute companies.

Legal privilege

The controversial decision in SFO v ENRC, which on its face greatly reduced the likelihood of being able to rely on litigation privilege in the context of internal investigations, is listed for appeal in April 2018. The Law Society is intervening and this will undoubtedly be one of the most significant cases of the year. Companies will need to consider the ruling from the Court of Appeal (which we anticipate is likely to be further appealed to the Supreme Court) with great care when deciding how best to conduct internal investigations.

https://www.youtube.com/watch?v=F94xoHZdREc

Dates for the diary