Criminal Law Insights: July 2021

SFO round-up: Recent wins and continued challenges

In May of this year, the SFO published its 2021/22 Business Plan, bringing the organisation into the final year of its 2019-2022 Strategic Plan. Reflecting on its successes, the SFO concluded it had responded "exceptionally well" to the changes of the past year. Recent wins such as entering into the DPA with Amec Foster Wheeler Energy Limited and GPT's guilty plea to corruption are undeniable, but the SFO continues to face some very public challenges.

Beyond a decreasing case load, issues such as, a curtailing of the SFO's extraterritorial reach and disclosure errors in significant cases, have resulted in a challenging tenure for Director Lisa Osofsky. The SFO could use some good press, so it is perhaps unsurprising that its Business Plan recognises the need for the organisation to build its "brand and image". It remains to be seen how successful the SFO will be in doing so.

> Read our full update here.

Corporate criminal liability reform

The Law Commission is consulting on potential reforms to the law on corporate criminal liability in England and Wales. The consultation forms part of a Law Commission project to assess different options for reform, following concerns raised by prosecutors and others that it is often too difficult to prosecute companies under the current law. Options currently being considered include reforming the general law on corporate criminal liability (the so-called 'identification principle') or introducing new 'failure to prevent' offences that would hold corporations liable for the misconduct of their employees and agents. The issue has proved highly controversial. Critics of reform argue, for example, that extending corporate criminal liability would place a disproportionate compliance burden on law abiding businesses.

The consultation is open until 31 August 2021. The discussion paper and links to a series of virtual consultation events (one of which Stephen Gentle took part in) are available from the Law Commission's website. The Commission is aiming to publish its options paper in late 2021, following which the Government will consider further steps.

New UK anti-corruption sanctions regime

In February 2020, we reported that the introduction of the UK Sanctions and Anti-money Laundering Act 2018 provided ministers with wide-ranging powers to implement thematic global targeted sanctions regimes post Brexit. Since leaving the EU, the UK has implemented the Global Human Rights Sanctions Regulations 2020 and the Cyber (Sanctions) (EU Exit) Regulations 2020, pursuant to which it has made 78 designations for human rights violations and 12 designations for cybercrime violations across the world, including Russia, China and Saudi Arabia.

The UK has kept up the momentum of using sanctions as a tool to further its foreign policy objectives through implementing the Global Anti-Corruption Sanctions Regulations 2021 in April 2021 in a bid to combat "serious corruption". So far, only 22 individuals have been sanctioned, including four Russian nationals accused of allegedly conspiring in a £166 million scheme devised by Russian state officials to steal state assets uncovered by Sergei Magnitsky, however, this list is expected to expand in the coming years.

The new "thematic" sanctions will allow the UK to act against corruption beyond the jurisdictional scope of the Bribery Act 2010, and avoid prospective legal challenges resulting from stretching traditional financial sanctions into new areas. The move has been welcomed by the US due to its similarities to the US Global Magnitsky programme. However, it remains to be seen as to whether the UK Office of Financial Sanctions Implementation (OFSI) will back up the new measures through adequate enforcement action, as historically it has imposed far less in volume and level of fines than its US counterpart, the Office of Foreign Assets Control (OFAC).

The Modern Slavery (Amendments) Bill

Following a consultation last year and in the context of increasing focus on corporate ESG disclosure and due diligence, the UK Government committed to reform designed to improve the quality of modern slavery reporting. Progress with those reforms (for more detail see here) has been relatively slow, due to a lack of Parliamentary time.

Presumably as a result of that lack of progress, a private members bill - the Modern Slavery (Amendments) Bill (the Bill) - was introduced before the House of Lords on 15 June 2021. In addition to enhancing disclosure requirements, the Bill would make it a criminal offence for a person responsible for a modern slavery statement, which would include all Directors, to knowingly or recklessly supply a false or materially incomplete statement, and would allow for the imposition of fines up to 4% of revenue.

The Bill is unlikely to be enacted. However, if it was enacted as drafted, its impact would be radical. In the past many companies have perceived Modern Slavery Statements to be a tick box exercise. The proposed custodial sentences and GDPR level fines would rapidly change that approach. A more likely outcome is that it may influence the ultimate Government position in this area. At the very least, it is suggestive of where the debate is heading and the potential for intersection between the ESG agenda and the criminal law.

> Read our full update here

Australia's US CLOUD Act-style law

On 24 June, the Australian Parliament passed the Telecommunications Legislation Amendment (International Production Orders) Bill (the Bill) which enables Australian authorities to compel the production of data from entities with a presence in the jurisdiction, even if it is stored abroad. The Bill follows similar legislation in other jurisdictions, such as the US's Clarifying Lawful Overseas Use of Data Act 2018 (CLOUD Act) and the UK's Crime (Overseas Production Orders) Act 2019, and forms part of a growing framework supporting cross-border investigations and cooperation in relation to the same.

Once specific communications-sharing agreements are signed with other countries, Australian authorities can compel the production of data from companies directly. Prosecutors hope that, rather than utilising the invariably cumbersome and slow mutual legal assistance process, the Bill will allow authorities to keep pace with the often fast-moving nature of criminal investigations.

Although its efficacy remains to be seen, such legislation is indicative of the desire of public prosecutors to ensure they have the tools to deal with the increasing complexity of data recovery in criminal investigations.

> Read our full update here