Construction, Extractive (incl. oil & gas) - Written by on Sunday, March 6, 2011 4:42 - 0 Comments

Richard Alderman: POCA face? Corruption & money laundering: Key theme for SFO in 2011

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Richard Alderman confirmed last week the SFO’s new focus on the use of UK money laundering legislation in corruption cases.

Speaking at a conference in Belgium he said:

“…there is a link to money laundering. Speaking for the SFO, we have tended to concentrate on corruption offences by themselves. What we have been doing recently though and I certainly see this developing much more in the future, is to make the important link between corruption and money laundering. We are starting to do this in cases. I expect to see far more of this work in future. I expect us to follow the money against a range of individuals and organisations so that all of those involved in corruption and the laundering of corrupt monies are dealt with by prosecution or through some other way. It seems to me that there is a very great deal of potential in this area.”

A repeat performance

Last month we wrote about our recent meeting with Richard Alderman when he confirmed his intention to use the POCA in the context of corruption cases.

Last year we wrote extensively on the likely use of money laundering legislation by the SFO in corruption cases when we wrote on thebriberyact.com here and here and also on the FCPAblog about UK money laundering laws, how they apply in corruption cases and the risks posed to corporates and Boards as a result.

Richard Alderman alluded to the importance of UK money laundering legislation over a year ago too when he said to an audience of lawyers:

“Which of you would like to go and visit your CEO and CFO in a police station where they are being held following arrest on money laundering charges.  Those charges will be based upon decisions by the CEO and CFO on your advice that disclosure will not be made to the SFO and that the benefit of the corruption will therefore be retained within the corporate.  I can imagine some difficult discussions.”

No idle threat

Mr. Alderman’s reference to “starting to [use money laundering laws] in cases” is not an idle threat.

Last month’s announcement by the SFO that it used money laundering laws to force M.W. Kellogg Limited to pay just over £7 million in recognition of sums it was due to receive which were generated through the criminal activity of third parties was an important example.

As we wrote then, the UK’s anti-money laundering laws can (and will almost certainly) be used much more aggressively.

UK prosecution agencies routinely use the money laundering legislation in other criminal contexts and the counsel used by the SFO are very well versed in its application already.

There are economic reasons why the use of money laundering legislation could also appeal to the SFO.

As Lord Justice Thomas highlighted in Innospec (para 36 ii):

“Under what is somewhat surprisingly called an “incentive scheme”, the proceeds obtained from a confiscation order are, once collected by the Ministry of Justice, distributed to the Home Office in accordance with an agreed protocol with HM Treasury. That confiscation income is then distributed by the Home Office who retain 50% passing 18.75% to the prosecuting authority and 18.75% to the investigating authority and 12.5% to Her Majesty’s Court Service.

As the Serious Fraud Office is both the investigating and prosecuting authority, 37.5% of the confiscation amount in this case would go to the SFO, it would form part of the income of the Office.”

UK money laundering laws are already in force, in widespread use today, carry custodial sentences longer than under the Bribery Act and are referred to by the courts as “justifiably  draconian”. In contrast to the Bribery Act no-one bats an eyelid at their use.

Ignoring them would be a big mistake.

Image © Crown Copyright 2011


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