Regulatory Timeline | Anti-Corruption, Bribery and Business Crime – April 2016

Written on 13 Apr 2016

“Businesses continue to face increasing scrutiny and sanctions from enforcement agencies, both in the UK and internationally, with bribery and corruption remaining key targets.

Despite some high-profile investigations and prosecutions having collapsed, the Serious Fraud Office has secured increased funding for key investigations and will have been emboldened by having successfully deployed the section 7 Bribery Act corporate offence of failing to prevent bribery, and secured a first Deferred Prosecution Agreement.

The Financial Conduct Authority’s Senior Managers Regime is now in force and will enable the prosecution, and imprisonment, of senior bankers on the basis of reckless conduct. Meanwhile, the government intends to revise the sentencing regime to encourage guilty pleas at the earliest opportunity.”

Tom Ellis, Partner, Osborne Clarke 

March 2016 – New rules and responsibilities for senior staff of financial services firms

As of 7 March 2016, senior managers at UK banks, building societies and certain systemically important investment firms could face up to seven years in jail or an unlimited fine if they make a decision which results in the institution failing (under section 36 Banking Reform Act 2013).

Also now in force are the Certification Regime, which introduces a regime of regulatory prior approval of regulated firms’ key people, and the new Senior Managers Regime. These new regimes will impose duties on key people, including a responsibility to take reasonable steps to prevent regulatory breaches in the areas for which they are responsible.

May 2016 – London global anti-corruption summit

In May 2016, the UK will host an anti-corruption summit to bring together world leaders and focus on international action to pursue the following objectives: 

  • deterring corruption; 
  • ending impunity for those who commit corruption; and
  • supporting and empowering those who have suffered from corruption.

The UK has invited G20 countries and other countries involved in the fight against corruption, as well as leading international organisations including the UN, World Bank, OECD, and the IMF.

2016 – Deferred Prosecution Agreements (DPAs)

Following the Serious Fraud Office’s (SFO’s) first use of a DPA (see here), the SFO’s approach to the use of DPAs is likely to remain a hot topic during 2016. The recent conviction of Sweett Group for an offence under section 7 of the Bribery Act 2010 (see here) indicates that the SFO is not currently prepared to modify its position on what constitutes full cooperation from a business. Sweett Group’s level of cooperation was not deemed high enough to warrant the offering of a DPA.

2016 – Review of financial impositions in the criminal courts

On 19 February 2016, the Ministry of Justice announced that it would be conducting a review of financial impositions in the criminal courts. This consultation will consider how costs and penalties are imposed on offenders and seeks to bring “greater simplicity and clarity to the system in England and Wales”.

Increased clarity will help businesses facing potential enforcement action to make informed choices about their options.

Q3/Q4 2016 – Investigatory Powers Bill

The Investigatory Powers Bill was passed on its second reading in the House of Commons on 15 March, and is set to come into force before the end of 2016.

The Bill is largely based on the draft Investigatory Powers Bill published in November 2015, which detailed new internet and phone surveillance powers, including the bulk collection of large volumes of personal communications data.

Although there have been a number of changes to the previous draft Bill, the Bill still contains many controversial aspects.

For more information on the Investigatory Powers Bill see here.

2016/17 – Enhanced transparency on the beneficial ownership of foreign companies buying property

The Department for Business, Innovation and Skills (BIS) has issued a consultation on proposals to improve the transparency of the beneficial ownership of foreign companies that purchase land or property in England and Wales, or which enter into public procurement contracts in England.

The proposed measures are intended to safeguard the UK property markets from becoming a haven for tax evasion, money laundering and terrorist financing.

The consultation closed on 4 April 2016. We are expecting BIS’s response to the consultation and proposals in the second half of 2016 or in early 2017.

These proposals are part of the UK’s wider efforts on increasing transparency, which includes the people with significant control (PSC) register, which from 6 April 2016 unlisted UK companies and LLPs need to maintain (see here for more detail on the PSC register).

2016/17 – Policing and Crime Bill

The Policing and Crime Bill will introduce a number of reforms to policing, including changes to the pre-charge bail regime.

The Bill will introduce a presumption that while an investigation is on-going, the suspect should be released without bail unless certain pre-conditions are met.

Where those conditions are met, the maximum initial period of bail will be longer for SFO investigations (particularly those designated “exceptionally complex”). Any extensions beyond that initial period can only be granted by the magistrates’ court, introducing judicial oversight of pre-charge bail for the first time.

We expect the Bill to be passed into law in late 2016 or early 2017.

2016/17 Reduced sentences for guilty pleas

In February 2016, the Sentencing Council opened a consultation on proposed new guidelines for the reduction in sentences for guilty pleas.

Courts already give a reduction in sentence for a guilty plea, but the proposed guidelines seek to clarify the application of this principle.

These guidelines, if adopted, will provide a more limited approach to the maximum reduction than is currently allowed by judicial discretion. Defendants will have to admit their guilt on the first occasion a charge is put to them in order to obtain the maximum possible one-third reduction. The available reduction reduces thereafter.

This consultation closes on 5 May 2016.

2016/17 Fourth Anti-Money Laundering Directive

The EU’s Fourth Money Laundering Directive (MLD4) came into force on 25 June 2015. Under MLD4, Member States were given until June 2017 to pass national implementing legislation. However, the European Commission is now asking Member States to pass that legislation by the end of 2016. The Commission is also likely to propose a number of “targeted” amendments, to give further power to the Directive, by the end of June 2016.

The objective of MLD4 is the protection of the financial system by preventing, detecting and investigating money laundering and terrorist financing. It aims to achieve this by setting out a high level of common standards that must be achieved by Member States as a minimum (it is a “minimum harmonising directive”).

MLD4 covers:

  • customer due diligence;
  • beneficial ownership information;
  • reporting obligations;
  • data protection and record keeping; and
  • policies, procedures and supervision.

Organisations caught by MLD4 will include: financial services institutions, auditors, external accountants, tax advisers, notaries and other independent legal professionals, trust or company service providers, estate agents, providers of gambling services and any company trading in goods that deals in cash transactions of EUR 10,000 or more.

For more information and details of all of the other areas covered by the Regulatory Timeline click here, or download the full Timeline here.