Time To Cotton On: Managing Supply Chain Risks

• Author: Mr James Maton and Benjamin Sharrock
• Law Firm: Cooley LLP
• Published date: 15 March 2023

Introduction

Potential criminal activity in international supply chains can create reputational, civil, and criminal risks. This can be particularly difficult to manage when there are many links in a chain from the source of raw materials to the final product.

One regular question is whether revenue and profit generated from tainted supply chains can be regarded as the proceeds of crime; if so, anti-money laundering legislation may be engaged. This has been considered in a recent High Court case, arising in the context of a special interest group challenging a law enforcement decision not to launch an investigation into alleged supply chain criminality¹.

Background

The World Uyghur Congress ('Congress') is a non-governmental organisation that seeks to promote the collective interests of the Uyghur people. Congress alleges that it has provided compelling evidence to UK law enforcement agencies that UK companies importing cotton from the Xinjiang Uyghur Autonomous Region ('XUAR') are benefitting from criminal activity and human rights abuses in their supply chains, that the cotton is sourced from facilities that qualify as 'foreign prisons', and that as a result the revenue and profits generated by the import and use of the cotton are the proceeds of crime. Congress argued that the UK authorities should investigate whether money laundering offences had been committed, and whether they should exercise their powers to bring POCA civil recovery proceedings.

The UK authorities declined to do so...