What’s on the agenda for 2018 in business crime?

Written on 10 Jan 2018

The last 12 months have seen significant developments in the enforcement of business crime, including important new legislative measures such as the failure to prevent the facilitation of tax evasion offence, unexplained wealth orders and new anti-money laundering regulations. Over the next 12 months, it is likely that the legal burden on corporates to prevent corporate crime will continue to grow and be supported by an increasingly aggressive response to potential breaches of business crime laws.  We discuss below six particular areas where we expect to see signfiicant developments in the coming year:

  1. New look SFO: A new Director will be in place in April, replacing David Green CB QC, and the agency will now be subject to “direction” from a newly created National Economic Crime 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 nevertheless anticipate that the SFO, in conjunction with other agencies,  will seek to  enhance its enforcement capabilities in the corporate world.
  1. 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 increase in 2018.
  1. 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.
  1. FCA enforcement:  For businesses in the financial services sector specifically, the FCA has not, to date, focussed on the 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.
  1. New offences: Consideration is also (again) 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 a 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.   
  1. 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.

Whilst the bandwidth available to the government in the UK,  in light Brexit, to get legislation over the line, remains uncertain,  the broad direction of travel continues to be towards increased corporate strict liability. The new year presents a timely opportunity for businesses to review their compliance systems to ensure that they are sufficient to meet this evolving landscape. As we explain in our latest Business Crime Newsletter, this general trend in enforcement can be seen across a number of jurisdictions, with authorities paying closer attention to corporate practices and legislatures enacting new legislation to combat illicit practices.  These developments will present ever-growing compliance challenges for international businesses, and we will  be providing further updates on these issues as they continue to develop throughout the year.

Please get in touch with one of our experts if you would like to discuss how we can assist you to remain compliant, in the UK and internationally.