Trends and Themes in White Collar Crime: Roundtable and Dinner

1. SFO

a) We discussed the upcoming replacement of the SFO director and whether that means the white-collar and financial crime landscape will change. We noted our surprise that more people were not clambering to fill this ostensibly fascinating role – and concluded that morale remains very low. We speculated as to whether the UK government would take the opportunity to take a more aggressive stance on prosecuting economic crime.

b) We discussed that fraud is the biggest type of crime in the UK, yet we have not seen the same energy go into enforcement as into talk of enforcement. We observed that there was a growing body of civil litigation dealing with fraud and other economic crimes.

c) We discussed the increasing cross-jurisdiction cooperation between various enforcement agencies, while noting that the SFO is more frequently taking a backseat and allowing more aggressive counterparts to do the heavy-lifting: not just the Americans but these days the French as well. As a result, corporates with headquarters or substantial operations in jurisdictions with more aggressive regulators tend to focus more on compliance in those jurisdictions.

d) We noted that the SFO has had more enforcement success recently against individuals than corporates, which may be down to corporates being more willing to expose their officers and employees.

2. Failure to Prevent Fraud Offence

a) We discussed the new failure to prevent fraud offence, which was tabled for Parliamentary debate earlier this year. We shared our observations that there had been minimal debate within companies on the offence. We noted, optimistically, the hope for better guidance from the Home Office than we received for the Bribery Act.

b) We shared that the new offence has caused many of us to undertake some necessary reflection on our internal systems. Certain failures to take action, or weakness in or lack of internal controls, could now be an offence under the new regime. We pondered whether we could expect a change in the way corporates function, but concluded that, without robust enforcement of the new offence, it will be very much down to each corporate’s own risk appetite.

3. Privatisation of enforcement

a) We observed that in-house counsel and compliance these days are the main police of economic crime, despite the existence of regulators like the SFO and OFSI. But this “free for all” can lead to uncertainty and widely diverging practices, especially when regulations and legislations are new and not clear, as is often the case. For sanctions in particular, we observed that there exists a range of interpretations of most regulations, so corporates and private actors regularly err either by doing too little or by going too far.

b) Finally, we discussed self-reporting. We observed that the trend of self-reporting has waxed and waned over the years. For regulated companies, much self-reporting is mandatory; for the rest, it is heavily dependent on a company’s risk appetite, and more and more are weighing the consequential risk of investigation and enforcement following a self-report against the apparent weaknesses of the UK’s agencies in finding and pursuing cases (and, in the case of OFSI, an apparent lack of will to enforce).