Investigating serious economic crime
April 2015 | PROFESSIONAL INSIGHT | FRAUD & CORRUPTION
Financier Worldwide Magazine
The growth in the scale and use of technology and the ease of international travel has made cross-border economic crime more significant today than ever before. It can take many forms: bribes paid to foreign public officials to secure lucrative contracts; international competitors entering secret agreements to profit at the expense of customers; bankers seeking to secure personal advantage at the expense of customers or market users; whilst the proceeds of crime are moved from one jurisdiction to another to obfuscate the money trail.
It follows that the alleged perpetrators may be in one (or more) jurisdiction, victims and witnesses in another (or indeed many others), whilst the proceeds of those crimes might be elsewhere still. This article outlines the ways in which the UK can and does cooperate with overseas law enforcement.
Where to prosecute?
The first and most fundamental question is where a particular cross-border crime should be investigated and prosecuted. Generally speaking, countries reserve criminalising behaviour which takes place in or affects their own territory, but conduct in one country which affects those in others might result in criminal liability there as well.
Within the EU, Eurojust acts to coordinate investigations and prosecutions in cross-border criminal cases. The arrangements are reflected in guidance published by the UK’s Director of Public Prosecutions on the handling of cases where the jurisdiction to prosecute is shared with prosecuting authorities overseas. On occasion, a joint investigation team, with members from different jurisdictions, will be merited.
There are particular arrangements with the US. Where there is real possibility that a US prosecutor may have an interest in a serious, sensitive or complex case, the guidance demands notification to the Attorney General’s Office, and consultation and cooperation with the US prosecutor from the outset. It can result in different trials for different individuals in different countries.
In order to obtain evidence found in other jurisdictions, investigators and prosecutors can seek mutual legal assistance (MLA). MLA is not dependant on the existence of an underlying international agreement between states. The UK can grant assistance to any country, although the existence of a multilateral or bilateral treaty might impose specific conditions or procedures.
Requests are generally channelled via the UK Central Authority, part of the Home Office, which has discretion whether to grant assistance. Ordinarily requests are acted upon, in the absence of compelling reasons not to. Such reasons might include the risk of double jeopardy – a person being tried for the same crime twice, or a request which would be an abuse of process. In addition, as a public authority, the UKCA is bound by the European Convention on Human Rights, and must consider, for example, any fair trial concerns about the requesting state.
Where a requesting state requires MLA, it has to provide the UK with information about the investigation. It has to identify the suspect and describe the alleged offence (or offences), set out the type of assistance sought, and explain the connection between the evidence requested and the investigation.
The UK can assist in a variety of ways. Perhaps the most significant are: the provision of evidence by questioning witnesses or suspects; the provision of material held by third parties in confidence; restraint and confiscation of assets; and search and seizure of evidence from premises. Some measures require an application to be made to a court, and so the requirements for assistance are more stringent, such as a demonstration of dual criminality, i.e., that the conduct alleged would amount to a criminal offence in both requesting state and in the UK (had it taken place in the UK). Particularly where the rights of third parties might be affected, the court will require a full justification as to the necessity of such intrusive measures.
In cases of serious or complex fraud (including corruption), a request may be referred to the Serious Fraud Office (SFO), which is able to use its powers under section 2 Criminal Justice Act 1987. As well as the ability to obtain search warrants, the SFO can compel individuals to answer relevant questions or provide relevant documents. This power overrides confidentiality, but not legal professional privilege. As non-compliance is a criminal offence, it can be a very powerful tool in the investigation of serious economic crime.
Sometimes an overseas authority will need intelligence, rather than MLA. Intelligence requests are made directly to UK law enforcement bodies. The principle limitation on such an approach is that coercive measures, such as searches, production orders and summonses to provide evidence in a Magistrates’ Court, cannot be obtained this way. However, there is nothing to prevent requests to third parties for the voluntary provision of evidence.
Criminal asset freezing
In order to secure assets, overseas authorities can obtain orders in their own jurisdiction and apply for them to be registered and recognised in the UK. Restraint orders prevent the persons to whom they are addressed from dealing with any UK assets identified in the order, and make it a contempt of court for anyone to knowingly assist any such dealing. For that reason, the orders are served on any relevant financial institutions which hold accounts and entries are made on the Land Registry to prevent the sale of any identified property. Provided the overseas authority can make their case, assets held in the name of third parties can be the subject of an order.
The orders remain in place whilst ever it appears to a UK court that the assets might be required to satisfy an overseas confiscation order, and if such an order is made, the UK can assist in realising the assets and remitting them to the requesting state. There are only limited grounds for challenge.
When a requesting state is ready to charge and put defendants on trial, it can request their extradition. The UK operates two procedures: the fast-tracked EAW system for fellow EU member states, and extradition with the rest of the world. Unlike MLA, the UK has to have a treaty arrangement with a requesting state in order to extradite. The UK currently has bilateral arrangements with 92 states, including the US. The UK is also a party to a number of multilateral treaties which address only particular types of crime. However, in the absence of any general treaty arrangements, the UK might be prepared to agree a one off request, called a ‘special arrangement’. Such arrangements are very rare indeed; the presumable rationale being that the UK already has relationships with those countries that possess what are considered appropriate protections for defendants in criminal trials.
For those who are the subject of a request, they have an opportunity to contest their extradition in court. The grounds of opposition are contained in the Extradition Act 2003, and include political or other extraneous considerations, human rights and the recent addition of the ‘forum bar.’ In theory, the UK can now refuse to extradite if a court is satisfied that it would be in the interests of justice for the person to be tried in the UK rather than overseas. However, the issue can be taken out of the court’s hands by the prosecution certifying that it would not be in the public interest to try the case here, and given the existence of cooperation in cross-border cases from the outset, it is highly unlikely to have any real application.
Recognising the nature of and threats posed by international cross-border economic crime, the UK has highly developed mechanisms for coordinating investigations, gathering evidence and otherwise supporting proceedings overseas. The aim is always to identify from an early stage whether proceedings might take place in the UK, or elsewhere. If elsewhere, the UK offers assistance widely, although the more intrusive measures are subject to judicial oversight.
Neil Swift is a partner at Peters & Peters. He can be contacted on +44 (0)20 7822 7763 or by email: firstname.lastname@example.org.
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