UK Economic Crime Group: Enforcement Update - October 4, 2018

In this edition of the UK Enforcement newsletter, we provide an update on the Sanctions and Anti-Money Laundering Act of 2018, which received Royal Assent in May, and the activities of the recently formed House of Lords Select Committee on the Bribery Act. Other updates include developments with Unexplained Wealth Orders, the new National Economic Crime Centre and the UK Crime Overseas Production Orders) Bill, as well as an introductory speech by the UK Serious Fraud Office's new director.

In addition to these topics, we also address recent litigation-related developments involving Güralp Systems Limited, the much-anticipated appeal of Director of the Serious Fraud Office v Eurasian Natural Resources Corporation and The Queen (on the application of KBR Inc.) v Director of the Serious Fraud Office.

Table of Contents

May »

Sanctions and Anti-Money Laundering Act 2018 The Sanctions and Anti-Money Laundering Act 2018 received Royal Assent on 23 May 2018 and will enable the UK to operate its own sanctions regime, independently from the EU.

House of Lords Select Committee Calls for Evidence on the Bribery Act 2010 The House of Lords Select Committee on the Bribery Act 2010 was formed in May 2018 to consider the Act's effectiveness. The Committee is due to report its findings by 31 March 2019.

GDPR and Data Protection Act 2018 The General Data Protection Regulation came into force on 25 May 2018 and is implemented in the UK by the Data Protection Act 2018. This new legislation updates data protection laws for the digital age and significantly increases the enforcement powers of the supervisory authorities.

July »

Unexplained Wealth Orders In our last UK Enforcement Update (May 14, 2018), we reported that the National Crime Agency had, in February 2018, secured the UK's first Unexplained Wealth Orders, which had been available since January 2018 with the enactment of the Criminal Finances Act 2017. An appeal against one of these orders was recently heard in the High Court, with Mr Justice Supperstone dismissing the appeal on 3 October 2018.

August »

Güralp Systems Limited The US DOJ has released Güralp Systems Limited from a potential prosecution for FCPA and money laundering violations days after the UK Serious Fraud Office (SFO) announced, on 17 August 2018, its decision to charge both Güralp Systems founder Dr Cansun Güralp and former managing director Andrew Bell with conspiracy to make corrupt payments to a South Korean public official at the Korea Institute of Geoscience and Mineral Resources. Further charges were announced on 28 September 2018 when Güralp Systems' former head of sales was charged with conspiracy to make corrupt payments.

September »

New National Economic Crime Centre The new National Economic Crime Centre is due to commence operations on 31 October 2018 and will include members from the National Crime Agency, Serious Fraud Office, HM Revenue & Customs, the Financial Conduct Authority, and City of London Police, as well as the private sector.

Lisa Osofsky's Introductory Speech The new Director of the UK's Serious Fraud Office, Lisa Osofsky, gave an introductory speech at the Cambridge International Symposium on Economic Crime on 3 September 2018.

ENRC On 5 September 2018, the Court of Appeal Civil Division delivered its judgment in the much-anticipated appeal of Director of the Serious Fraud Office v Eurasian Natural Resources Corporation [2018] EWCA Civ 2006. In this important case, the SFO's contention that internal investigations were not protected by legal professional privilege was successfully challenged.

KBR On 6 September 2018, the Administrative Court delivered judgment in the important judicial review application The Queen (on the application of KBR Inc.) v Director of the Serious Fraud Office [2018] EWHC 2012 (Admin), which concerns the extent of the SFO's powers to require the production of evidence held outside the UK.

Crime (Overseas Production Orders) Bill On 10 September 2018, the UK Crime (Overseas Production Orders) Bill concluded the House of Lords Committee Stage. The bill seeks to extend the powers of UK authorities to access electronic communications in the course of criminal investigations and prosecutions.

MAY

Sanctions and Anti-Money Laundering Act 2018

As the UK prepares for its departure from the EU, measures have been taken to ensure that it has the power to impose sanctions autonomously. Currently, these powers exist only in EU law and to a limited extent, in the UK's anti-terrorism legislation. Having been debated since October 2017, the Sanctions and Anti-Money Laundering Act 2018 (the Act) received Royal Assent on 23 May 2018 and is the first significant Brexit-related legislation to be enacted. It will enable the UK to operate its own sanctions regime, independently from the EU.

The Act is expected to come into force in time with Brexit and will enable the UK to impose financial, immigration and trade sanctions against target individuals or groups (designated persons) and countries. In theory, the Act is wider in scope than existing laws and raises the possibility that that the UK will have the power to impose sanctions on a more extensive basis.

Unlike EU law, which requires sanctions to be "necessary," the Act enables the Secretary of State and the Treasury to meet a lower threshold for making sanctions regulations when it is considered "appropriate" to do so for any of the following purposes:

To further compliance with a UN obligation; To further compliance with any other international obligation; or For other purposes set out in Section 1(2) of the Act, including purposes that would: Further the prevention of terrorism, Be in the interests of international peace and security, Provide accountability for or be a deterrent to gross violations of human rights, or otherwise promote: Compliance with international human rights law, or Respect for human rights. The purpose covering human rights abuses is the so-called "Magnitsky Clause" which made an appearance in the bill shortly after the Salisbury attacks earlier this year. It empowers the UK to exert pressure on governments with the aim of tackling widespread human rights abuses. At the time of writing, UK Foreign Secretary Jeremy Hunt has called on the EU and the United States to implement further sanctions against Russia, suggesting that the UK will adopt a robust approach when it comes to exercising its own powers in response to "aggressive and malign behaviour."

As with all new legislation, businesses should be familiar with any changes that are introduced to ensure they are compliant when the Act comes into force. For example:

The Act will enable designation of persons not only by name, but also by description. The description must be sufficiently precise such that a reasonable person would be able to identify individuals falling within the description. Whilst in most cases "designated persons" tend to be those in power or with significant wealth, the broad scope of this power could lead to some uncertainty when organisations attempt to identify those that meet the description. There is an increased potential for more...