UK Economic Crime Group: Enforcement Update

NEWS IN BRIEF

The long-awaited Criminal Finances Bill received Royal Assent in April, becoming the Criminal Finances Act 2017 in the process. The legislation creates new, wide-reaching offences of corporate failure to prevent the facilitation of tax evasion, in respect of which companies are highly likely to have to introduce new policies and procedures to ensure compliance. The Act also introduces significant changes to the Suspicious Activity Reporting Regime, which will give law enforcement agencies greater powers to investigate wrongdoing but, which may make it harder for firms in the regulated sector to avoid committing tipping off offences. Unexplained Wealth Orders (UWOs), which require individuals to explain the provenance of certain property in their possession, are another new tool that the Act has created to assist law enforcement in their fight against economic crime.

Given the outcome in the recent UK General Election, it is unclear whether Prime Minister Theresa May will continue with plans as set out in the Conservative Party Manifesto to abolish the SFO and subsume its functions into the National Crime Agency (NCA). What is clear is that the present budgetary restraints in multiple areas related to the Criminal Justice System will need to be addressed.

The Financial Conduct Authority (FCA) succeeded in the Supreme Court, obtaining a decision in FCA v Macris which limits the identification principle in respect of the statutory Notices it issues.

NEWS FROM THE SFO

Update on Investigation Into Unaoil

On 29 March 2017, the High Court dismissed the Judicial Review claim bought by Unaoil and a number of its executives against the SFO, in respect of the lawfulness of a Letter of Request issued to the Monegasque authorities to provide assistance with the ongoing investigation in the UK.

In its Judgment, the Court rejected the Claimant's submissions: that a request for Mutual Legal Assistance (MLA) needed to satisfy the same criteria as a domestic search warrant or be subject to a "heightened procedural obligation"; that the Crime (International Cooperation) Act 2003, governing the MLA regime, contained an implied duty of candour with which the Letter of Request did not comply; and that the Letter of Request was so broadly drafted, that it represented an unlawful "fishing expedition" with which to catch additional wrongdoing that was not, at the time, the subject of investigation.

The SFO has announced that it has formally opened related investigations into global technology and consulting services firm KBR Inc, and oil and gas giant Petrofac Plc, on 28 April 2017 and 12 May 2017 respectively. The investigation into Petrofac commenced after the SFO publicly rejected the results of the internal investigation report provided to it by Petrofac, adding that they did not consider that the company had cooperated with their investigations. Both the investigations of KBR and Petrofac relate to suspected bribery, corruption, and money-laundering.

Update on Investigations Into Eurasian Natural Resources Corporation (ENRC)

On 8 May 2017, Mrs Justice Andrews handed down Judgment in respect of the SFO's claim for a declaration that documents generated by forensic accountants and solicitors in the course of an internal investigation into ENRC were not subject to Legal Professional Privilege and must therefore be disclosed pursuant to notices issued under section 2 of the Criminal Justice Act 1987, to the authorities, in the course of their ongoing investigations into allegations of the commission of fraud, bribery, and corruption offences by ENRC, in various jurisdictions.

The Judgment makes clear that because investigation and prosecution are not part of the same amorphous process, documents generated in the 'investigation' phase would not, by...