Business and Financial crime

The Fraud Act 2006 formalised the majority of Fraud offences in England and Wales. Fraud requires an individual or Company to act dishonestly and can occur through a number of methods including by:

• Making false representations;
• Failing to provide information when you have a legal duty to provide that information;
• Occupying a safeguarding position and abusing that position;
• Making, supplying or possession articles for use in Fraud;
• Participating in a fraudulent business through fraudulent trading; or
• Obtaining services dishonestly.

The Bribery Act 2010 outlines the main Criminal offences relating to Bribery. A person or company commits bribery if they offer, promise, give or receive a financial advantage to/from another with the aim to induce or reward that individual to conduct an improper function or service which is in breach of a relevant expectation. The Bribery Act also includes offences of bribing foreign public officials and failure of commercial organisation to prevent bribery.

Money Laundering is the process of cleaning or legitimising money generated through criminal activity. The main source of legislation in the UK that relates to money laundering offences is the Proceeds of Crime Act 2002. However there are other sources of legislation that cover money laundering offences. The offence of money laundering requires that a company or its employee suspect the transaction they have undertaken involved criminal property/money. Proceeds of crime Act proceedings can be taken against individuals or companies following criminal proceedings to recover any benefit from criminal activity. Alternatively civil proceedings can be brought to recover money or property which is alleged to come from criminal activity using a lower standard of proof.

Companies are usually classed as organisations registered under the Companies Act 2006 or its predecessors. However it can also include unincorporated organisations where criminal liability can be shown. A Company or business can have proceedings taken against it as a “legal personality”.

There is no specific set legislation that provides for holding companies and businesses criminally liable. However criminal liability can be established through both vicarious and non-vicarious liability.

• Vicarious liability assumes the actions of a company’s employees or agents, within the normal processes of their employment, make the company liable for those actions.
• Non-Vicarious liability involves the actions of those directly involved in the running of the company and have responsibility or direction for the actions deemed to be criminally liable.

A company can form part of a conspiracy. However they cannot normally be criminally liable for actions of an employee or agent that acts well outside the limits of their employment.

The Serious Fraud Office (SFO) is a specialist body directly supervised by the Attorney General dealing with investigations and prosecutions relating to the most serious offending including complex fraud, corruption and bribery allegations in England, Wales and Northern Ireland. Investigations and Prosecutions by the SFO will normally include alleged behaviour which comprises significant potential economic and financial harm, involves high value financial loss, significant public interest and undermines the UK Financial Markets and particularly those within the City of London. The SFO works closely with other agencies including the NCA, HMRC, FCA and most regional police forces including the City of London and Metropolitan Police. The SFO can compel organisations to provide potential confidential material from its files before its investigations and refusal to provide such information or failure to attend investigation interviews can lead to arrest warrants being issued and potential criminal convictions and criminal penalties. Their investigations can be intrusive to both companies, and individuals involved in companies under investigation, and both investigations and Prosecutions can take years to complete. This means all parties can remain under the spotlight for lengthy periods of time. For these reasons we strongly advise that you seek advice immediately from a specialist Business and Financial Crime Lawyer if you are contacted by the SFO regarding any potential investigation.

The Financial Conduct Authority (FCA) regulate businesses involved in financial markets in the UK to ensure they operate in an “honest, fair and effective” manner. They regulate in the region of 60,000 businesses and their aim is the protection/promotion of competition and the protection of financial markets and their customers. Regarding Business and Financial Crime, the FCA conduct investigations into insider dealing and market manipulation, amongst other alleged financial market abuse. One of their key stated aims is the prevention, detection and punishment of those who abuse financial markets. The Prudential Regulation Authority (PRA) also come under the umbrella of the FCA and regulate banks, building societies, credit unions, insurers and high level investment organisations. The FCA undertake surveillance of financial markets and analysis of the data collected, whilst also working with other agencies including the Serious Fraud Office (SFO), Her Majesty’s Revenue and Customs (HMRC) and the National Crime Agency (NCA). The FCA can conduct their own investigations and it is recommended that you seek advice from a specialist Business and Financial Crime Lawyer immediately if contacted by the FCA.

The National Crime Agency (NCA) deal with serious Organised Crime which spans international boundaries. The NCA deal with international money laundering, cybercrime and international financial crime. The NCA operate in conjunction with all UK Crime Agencies and also together with international criminal agencies including Interpol, Europol and other international agencies. They have the power to arrest, investigate and bring prosecutions in the UK and can potentially do so for offences which were committed abroad. It is highly recommended that you seek advice from a specialist Business and Financial Crime Lawyer immediately if contacted by the NCA.

The HMRC undertake investigations where tax evasion and fraud is alleged and have developed computer program surveillance to identify potential suspects. The Crown Prosecution Service now undertake all HMRC prosecutions. The aim of the HMRC is to ensure compliance with UK tax law and prosecutions in this area have significantly increased in recent years due to high profile cases relating to tax evasion and avoidance. Changes in the law have led to this area becoming a potential minefield for businesses. Other potential problems include civil legal action in line with the Proceeds of Crime Act 2002, which can lead to Businesses having assets removed. It is highly recommended that you seek advice from a specialist Business and Financial Crime Lawyer immediately if contacted by the HMRC regarding tax evasion.

Local authorities have the power to conduct investigations and prosecute Companies in relation to a variety of alleged offending including breaches relating to: Health and Safety; Trading Standards; Environmental Health; Waste Disposal; Building Control; and Housing enforcement

Yes. Business owners and those involved in activity suspected of being criminal can be arrested or invited for a Police and Criminal Evidence Interview. However this would usually be upon the basis of individual criminal liability. If arrested, business and personal documents and computers can be seized meaning vital tools for any business could potentially be put out of use.

If financial criminal activity is alleged to have been conducted by your business or your employees then it is likely company directors will have to attend an interview under caution with the investigating organisation. This is likely to be an intimidating experience as in order to respond to allegations relating to Financial Crime you would likely be asked questions relating to specific actions taken by the directors, employees or agents. These allegations usually take place over relatively long periods of time, with the possibility directors may have limited or no knowledge of without referencing paperwork. In some instances, usually for the SFO, not only will business owners and directors have to attend interviews under caution if requested by the investigating organisation, they will be obliged to provide the investigators with potentially confidential or privileged documents. Otherwise normal interview procedures relating to criminal allegations are undertaken which either follows arrest whilst being detained or by voluntary interview. If contact by any organisation it is highly recommended that you seek advice from a specialist Business and Financial Crime Lawyer immediately.

If proceedings are brought against a Company alone, an organisation set up under the Companies Act 2006 or its predecessors, then usually the directors or owners of the business will need to attend to represent the company and in any event would likely want to present a defence or mitigation regarding any alleged offending behaviour of the company.

At Freemans Solicitors we will explore all funding options for cases and attempt to find the most suitable method for your Company to fund ongoing court investigations and court proceedings. It is highly unlikely companies would qualify for government funding. However we can explore other potential funding options, e.g. through insurance cover, to identify the best funding solution for your organisation.

There are a range of options open to the Courts when sentencing Companies including unlimited fines.  Other potential penalties for companies that fall foul of the regulations and the law surrounding fraud, corruption, bribery, financial markets, money laundering and tax evasion include post-conviction or civil Proceeds of Crime Act asset recovery.