Representatives of the SFO have recently given speeches indicating a renewed focus on stripping the proceeds of crime from those the SFO investigates and prosecutes.
What do you think has prompted this?
It is likely that this is at least driven in part by there being a new Director at the SFO. But there is also movement afoot in this area for other reasons. The Law Commission is now looking into the Suspicious Activity Reports Regime and is soon to be considering the Proceeds of Crime Act. It is only logical, therefore, that the SFO considers its role and priorities when it comes to the proceeds of crime.
Do you see this as a sea change in approach or not and for what reasons?
It is not really a sea change, at least not at present. The SFO is just reminding everyone that it is out there and "doing its job''. At the moment, unexplained wealth orders (UWO's) have only been used by the National Crime Agency (NCA) and it may be that the SFO feels the need to remind the public what it is doing. That said, however, the NCA is being timid when it comes to issuing UWO's at present, although it is at least using both them and the civil recovery proceedings under Part 5 of POCA. Only time will tell if we are to see a sea change regarding the SFO's approach to taking the proceeds of crime from those it investigates and / or prosecutes. For the SFO, any change will only be determined by its future use of Part 5 and UWO's – not by the speeches it gives on this matter.
What do the speeches indicate about the use to which unexplained wealth orders might be put by the SFO?
At the moment, the SFO seems to be allowing the NCA to take all the UWO cases that come their way. And this is despite the fact that the SFO is trying to be the lead agency on international bribery and corruption cases. Some say that the reason that the SFO is unenthusiastic about UWO's is that the financial settlement with the government does not allow it to collect a 'cut' from confiscated/ recovered assets under ARIS - the Assets Recovery Incentivisation Scheme. Since ARIS came into effect in 2006, 50% of any money recovered in confiscation has been kept by the Home Office, with the rest split three ways; between the investigators, the prosecution agency and the court service. But whereas the NCA gets to keep a portion of whatever it successfully recovers, this is not a benefit enjoyed by the SFO. And with law enforcement agencies confiscating a total of £201M in 2016-17, such a benefit can be large. Elizabeth Baker, the SFO's Head of the Proceeds of Crime and International Assistance Division, has stated that the SFO will be steered by what is in the public interest rather than commercial concerns. But it could be argued that such an approach is being tested by the SFO not receiving any gains under ARIS - which may account for its reluctance to use UWO's.
What should practitioners advising clients being investigated by the SFO be advising clients about the prospect of assets being forfeited or confiscated?
The advice remains the same as ever – and will depend on whether the client is an individual or a corporate. What must be emphasised is that all legal advisors in corruption cases need to be aware of the Court of Appeal's recent judgement in the case involving the mining group ENRC. [2018] EWCA Civ 2006. The judgement means that documents prepared as part of an internal investigation are protected by privilege and so cannot be used by an investigating agency – which was the SFO in the ENRC case – as part of its investigation.
But when it comes to the SFO's most recent statements regarding the proceeds of crime, the basic advice does not change. Putting it bluntly, any individual or corporate that believes they are under investigation (or about to be so) needs to seek expert advice immediately. Until relatively recently, forfeiture was not really an issue when advising clients with SFO investigations. But now the Criminal Finances Act 2017 has amended Part 5 of POCA to widen the definition of 'cash' for the purposes of forfeiture and the government is urging investigating agencies to consider asset recovery and financial investigation at the earliest possible stage. Such factors are likely to see a rise in civil forfeiture. The bigger concern regarding the SFO, however, may remain restraint orders, as they are a pre-cursor to a criminal charge.
The Court of Appeal's ruling in favour of the SFO in the case of SFO v Saleh, [2018] EWHC 1012 (QB), [2018] All ER (D) 208 (Mar) showed the SFO's determination and its ability to obtain civil recovery orders against property under Part 5 of POCA when the only connection to the UK is that the money was held in a bank account in this country. Yet the fact remains that the SFO is, for some undeclared reason, incredibly slow when it comes to using this non-conviction route. And this is despite its use of deferred prosecution agreements (DPA's) as alternatives to prosecution.
Practitioners have to be aware of these developments, advise clients accordingly and be ready and able to negotiate with or challenge the SFO whenever this is appropriate.
Any other points of interests worth mentioning here?
It must be remembered that before the arrival of DPA's in the UK, under the Crime and Courts Act 2013, there was only Part 5 of POCA available to the SFO. The alternative was a criminal prosecution; which was unlikely in cases involving corporates. It seems as if the SFO prefers using DPA's as opposed to Part 5. That at least has been the case until now. Former SFO Director David Green was an ardent cheerleader for DPA's. It remains to be seen if new Director Lisa Osofsky shares his enthusiasm for them.
The interview was originally published on LexisPSL Corporate Crime.
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