Adequate Procedures, All you need to know about self reporting, Money laundering - Written by Barry & Richard on Tuesday, May 31, 2011 23:46 - 2 Comments
Sleepless nights – is the SFO self reporting regime the answer?
In recent months the Arab Spring has ousted regimes – deals which were never supposed to see the light of day are emerging. The Director of the SFO, Richard Alderman, predicts that investigations will flow from the information emerging from the regime change in Africa.
Bribery risks not previously known are being uncovered as businesses undertake risk assessments in readiness for the impending Bribery Act.
A new era of enforcement begins
July 1st marks the entry into force of the Bribery Act and a new era of enforcement by the SFO when it comes to corruption.
As a result of the law of intended consequences the Bribery Act forces business to review business practices in a way never done so before. If a problem is revealed the UK’s draconian money laundering legislation kicks in and serves up a dilemma for the senior officers of the company who risk lengthy jail terms and unlimited fines if they choose to ignore the problem.
Can you fix it?
If the problem, say a contract obtained as a result of a bribe, can be fixed this may be the answer. It will be important to take legal advice to ensure that this is done properly.
But – if the problem cannot be fixed internally, then there remains the risk that senior officers who do nothing will commit an offence under the Proceeds of Crime Act which renders them liable to lengthy jail terms and unlimited fines.
The SFO have made plain that they intend to use the UK money laundering legislation increasingly in their enforcement approach. Richard Alderman has warned that the SFO will prosecute senior officers, even if they have no direct involvement in the underlying act of bribery, for money laundering offences if they decide to do nothing when faced with knowledge of corruption.
There may be a solution to all this.
The SFO’s self reporting regime.
The SFO has published guidance around the self reporting of corruption. A number of companies have used the procedure already.
The benefits of using the regime are threefold.
1.Senior officers who are not directly implicated in the wrongdoing but who are aware of it, will escape liability (notifying the relevant authorities is a defence under the Proceeds of Crime legislation).
2. A greater degree of control may be retained by the corporate in relation to the investigation who should be able to negotiate that third party advisers can conduct the investigation instead of the SFO.
3. The business may be able to negotiate and agree a civil settlement with the SFO, avoiding criminal prosecution. Alternatively, it may even be possible to agree, in appropriate circumstances (for example a rogue employee scenario) that the corporate will escape any sanction.
Is now the time?
If a business has just uncovered a problem as a result of undertaking a risk assessment as part of Bribery Act preparations or there is risk, for example following the Arab Spring, that one is likely to emerge, then now may be the time to deal with this using the SFO’s self reporting procedure.
Considering such a step is something which should not be done lightly and certainly not without legal advice. However, from a practical standpoint there is a window of opportunity now to deal with these issues in good faith which will not stay open forever.
The SFO is keen to demonstrate results in its approach to Bribery Act enforcement, but is unlikely to want to discourage self reporting.
We believe that in appropriate cases there is an opportunity for ethical companies, keen to implement Adequate Procedures to Prevent Bribery going forward, to obtain a better outcome now than may be the case later.