All you need to know about self reporting, Bribery Act & Proceeds of Crime - Written by on Sunday, March 18, 2012 2:50 - 0 Comments

Self reporting: The skinny.

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The recent news that Self Reporting in the UK has doubled in the last nine months comes as no great surprise.

In summary, the Bribery Act forces companies to look for trouble through ‘Adequate Procedures’.  Companies who uncover problems are faced with the dilemma of whether to inform the authorities by way of a Suspicious Activity Report (SAR).

Of course, the temptation is to sweep everything under the carpet.  However, individuals who decide not to come clean (and the companies they work for) risk prosecution under a completely separate money laundering offence with draconian penalties.  In a nutshell, in the UK in some industries a failure to report suspicions is in itself a criminal offence.  For others a failure to report means that there is no legal defence to a substantive money laundering crime.  A wafer thin distinction.  This is the UK stick for Self Reporting bribery and corruption.

On the other hand there is also a carrot, namely that for corporates which ‘Self Report’ there is a good chance that a civil settlement (as opposed to a criminal outcome) can be reached with the SFO – if the matter is properly handled.

It is the stick of this money laundering law and the carrot of possible civil (instead of criminal) resolution which drives much of the ‘Self Reporting’ in relation to bribery in the the UK.

How it works in practice

A company may elect to file a SAR in relation to a suspicion of bribery.  If it is doing this, it may conclude (depending on the circumstances) that it is also worth notifying the SFO (who will receive details of the SAR in any event).

Recently the SFO Director laid out a road map for Self Reporting so far as the SFO see it:

“Frequently what happens is that a corporation hears about an allegation of bribery, quite possibly through a whistleblower line.  The corporation will want to do some preliminary work in deciding on whether or not there is substance to the allegation.  At the end of this preliminary work, the corporation will take a view on whether a much more detailed investigation by its professional advisors is going to be needed.

We find that this is the point at which corporations contact us.  They want to alert us to what they are finding out and they want to involve us in the processes involved.  They also want full credit from us for self reporting.  That credit can come in the form of recognition that this should have a civil and not a criminal outcome.

We will discuss the case with the corporation at senior levels.  We will normally agree on the investigation to be carried out by the corporation’s professional advisers.  We expect to negotiate the terms of reference and the work plan for the investigation.  We expect regular updates so that there are no surprises when the eventual report comes to us.  We use the report in order to discuss a possible resolution.  This does not mean that we take the report completely at face value.  We will probe in order to find out whether the company has genuinely uncovered what has happened and has faced up to the consequences.  There can sometimes be a lengthy process of discussion here.”

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