Criminal law insights: July 2020

The SFO, COVID-19 and Recent Developments

The lockdown and pandemic have had a dramatic effect on all business; the business of law enforcement is no different. The SFO’s stated intent during the pandemic was to continue to investigate fraud, bribery and corruption cases as normal (subject to government guidance on working practices). While such intent is admirable, it is not entirely clear that the SFO has in fact managed to do so effectively.

Reports that interviews (perhaps unsurprisingly) stopped during lockdown and that evidence gathering activities were also much reduced suggest that further delay to long running SFO investigations is inevitable. Together with a small flurry announcements of investigations being dropped in the last few months, difficulties in the Unaoil trial and ongoing criticism as to the pace of its investigations, it would seem that the SFO could do with a good news story. We examine the relevant issues in full here.

We have separately published an overview of how various enforcement agencies in different jurisdictions have responded to the Coronavirus pandemic.

> Read our full update here

UK imposes sanctions on human rights offenders

In February 2020, we wrote about the UK sanctions regime post Brexit, the architecture for which is set out in the Sanctions and Money Laundering Act 2018 (SAMLA). SAMLA includes provisions enabling the Government to create a UK sanctions regime for gross violations of human rights, similar to Magnitsky sanctions in the US. On 6 July, the UK launched the human rights sanctions regime with the introduction of the Global Human Rights Sanctions Regulations 2020. The sanctions enable the UK to impose asset freezes on individuals and entities who are considered to have carried out serious violations of human rights.

At the same time, the FCO issued a policy paper setting out how designations would be arrived at. So far, 47 individuals and two entities have been designated.  These are Russian nationals involved in the death of Sergei Magnitsky, Saudi nationals involved in the murder of Jamal Khashoggi, senior military personnel implicated in the killing of Rohingyas in Myanmar and two entities involved in the use of forced labour in North Korea. When unveiling the sanctions, the Foreign Secretary indicated that a regime to target corruption under SAMLA was also being prepared.

The rise of AFFOs and UWOs in tackling illicit finance

Since coming into force in February 2018, we have seen a steady increase in the use of Asset Freezing and Forfeiture Orders (AFFO) and Unexplained Wealth Orders (UWO) by law enforcement agencies including the NCA, the SFO, HMRC and the police. These agencies have applied UWOs and AFFOs both independently and in combination to freeze and seize assets worth millions of pounds. In our article, we explain the use of these powers and their attractiveness to law enforcement (and the NCA in particular) in comparison to more traditional asset recovery routes. We note that AFFOs in general have been deployed more successfully than UWOs in physically recovering criminal funds, but highlight some concerns with their use, such as the low threshold required to obtain an order and the possibility that they may be deployed in advance of formally concluding, or in some cases, commencing an investigation.

> Read the full update here

Information-sharing within corporate groups

The UK Government has released a statement setting out principles and expectations to guide corporate groups through information-sharing protocols. In so doing, the Government has continued to encourage the trend towards facilitating cross-border information-sharing to enhance anti-money laundering and counter-terrorism financing efforts. The Government’s statement endorses the Financial Action Task Force’s recommendations on the subject and reinforces the importance of sharing information in compliance with GDPR and the Data Protection Act 2018.

> Read our article about the practical implications for corporates

Anti-money laundering regulation and enforcement update

With the National Crime Agency's ("NCA") annual plan for 2020-2021 reporting that losses from fraud increased by more than a third in the last calendar year, the agency has warned that individuals and corporates must remain alert amidst turbulent economic times. In light of the increased focus on businesses doing more to update and strengthen their compliance protocols, we provide an overview of money laundering news and developments over recent months from the latest FCA enforcement to COVID-19 related money laundering, and from JMLSG's cryptoasset guidance to 5MLD adoption in Germany and France.

> Read our full update here