In its 2019-2020 Annual Report (the Report), the UK’s sanctions office (the UK Office of Financial Sanctions Implementation (OFSI)) revealed that, between April 2019 and March 2020, it had received 140 voluntary disclosures of potential sanctions violations related to transactions worth a total of £982 million.  This represents a record number of reports, and an

(This is a cross-post from Steptoe’s new Investigations and Enforcement Blog.)

In May 2020, the U.K. Financial Conduct Authority, the authority charged with regulating financial firms and maintaining the integrity of the financial markets in the United Kingdom, reported that whistleblowing reports to the Financial Conduct Authority on workplace culture issues in 2019 had

On April 29, 2020, the European Commission announced plans to develop a legislative proposal by 2021 that will require EU companies to conduct mandatory human rights and environmental due diligence on their operations and global supply chains. If passed, the new law would also include provisions for corporate liability with possible sanctions imposed for non-compliance.

The announcement follows the publication of a study conducted for the European Commission which focused on the due diligence requirements to identify, prevent, mitigate and account for abuses of human rights, including the rights of the child and fundamental freedoms, serious bodily injury or health risks, and environmental damage including with respect to climate. The announcement comes as part of wider efforts across the European Union to prevent human rights abuses and protect vulnerable workers.Continue Reading Client Alert: Calls for European Companies to Focus on Human Rights Abuses in Supply Chain

The ink may barely be dry on (most) Member States’ national legislation transposing the EU’s Fifth Anti-Money Laundering Directive but the European Commission is pressing ahead with ever-more ambitious plans to tackle money laundering and terrorism financing with the aim of ensuring EU anti-money laundering laws are enforced consistently across all Member States.  On 7 May, the Commission adopted a new action plan, together with a parallel public consultation, with a view to delivering on the proposed actions by early 2021.

The new action plan is built on six specified pillars:

  • Effective implementation of existing rules;
  • A single EU rulebook;
  • EU-level supervision;
  • A support and cooperation mechanism for financial intelligence units;
  • Better use of information to enforce criminal law; and
  • A stronger EU in the world.

Continue Reading Trust, but Supervise – European Commission Sets Out New AML/CTF Action Plan

According to the European Commission, fraud offences against the European Union (EU) budget cost the EU and its member states over €1 billion in losses in 2018, in addition to the annual losses of around €150 billion resulting from VAT fraud. With current criminal enforcement efforts across the EU apparently failing to effectively tackle such offences, the EU established the European Public Prosecutor’s Office (EPPO) to act as an independent and decentralized office with the power to investigate and prosecute crimes against the EU budget, such as fraud, corruption, misappropriation and cross-border VAT-related fraud.

Set to become fully operational in November 2020, based in Luxemburg, with its funding for 2020 increased by nearly 50%, the EPPO is expected to ramp up prosecutions of corporate crime concerning the EU’s financial interests and facilitate the recovery of misused EU funds. Previously, only national authorities could investigate and prosecute such offences within the scope of their own borders.Continue Reading Client Advisory: European Public Prosecutor to Take EU Finance Fraudsters to Task?

Click here to read the full Client Advisory from Steptoe.

On March 4, 2020, the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department imposed a $450,000 civil money penalty against the former chief operational risk officer at US Bank National Association (US Bank), for his alleged role in failing to prevent violations of US anti-money laundering (AML) laws and regulations that occurred during his tenure.

FinCEN’s unprecedented individual enforcement action is the latest sign that US AML regulators intend to hold individual executives accountable for their roles in financial institutions’ violations of law. It serves as a reminder of the importance of strengthening compliance programs in order to minimize the likelihood of findings of individual liability. Meanwhile, authorities outside the United States, including in the UK, are increasingly focused on AML failings and individuals potentially liable for those failings.Continue Reading Client Advisory: FinCEN Penalizes Compliance Officer for Anti-Money Laundering Failures

The rampant spread of coronavirus across the world has brought with it terrible consequences to every conceivable part of life – hospitals have scrambled to care for patients, individuals have been confined to their homes, restaurants and bars have closed and flights have been cancelled.  The cogs of justice, however, also have not been immune from the reaches of the virus.

On 17 March 2020, the Lord Chief Justice of England and Wales, Lord Burnett, announced the adjournment of all new trials in Crown Court listed to start before the end of April that are expected to last longer than three days.  The decision was made as a result of the large number of participants – judge, members of the jury, defendant, lawyers, witnesses and staff and the consequent risks of a trial not being able to complete.  Lord Burnett’s announcement noted, however, that trials already underway would generally proceed in the hope that they could be completed.Continue Reading Coronavirus: Even Justice is in Quarantine

On 28 February 2020, a jury acquitted three former Barclays executives – Roger Jenkins, Tom Kalaris and Richard Boath – of criminal fraud charges brought by the Serious Fraud Office (“SFO”).  The charges were founded on allegations that the three had conspired to make secret payments to Qatar in exchange for the state’s provision of financial assistance to Barclays during 2008.  The acquittal concludes the SFO’s investigation in the matter which began in 2012 but also, however, allowed the release of previous judgments that, among other things, shed light on the difficulties in imposing corporate criminal liability.

On 3 July 2017, the SFO charged Barclays PLC with both conspiracy to commit fraud by false representation for failing fully to disclose to the stock market deals it had reached with Qatari investors and unlawful financial assistance by providing a $3 billion loan to the Qatari state’s sovereign wealth fund.  On 12 February 2018 Barclays Bank PLC also was charged with providing unlawful financial assistance.  On 21 May 2018 the charges against both Barclays entities were dismissed by the Crown Court, prompting a subsequent application by the SFO to reinstate all of the charges.  On 26 October 2018, the High Court dismissed the SFO’s application.  Any greater understanding regarding the reasons as to why the charges were dismissed and the Court’s approach to the imposition of corporate criminal liability, however, was put on hold as both Crown Court and High Court judgments remained subject to reporting restrictions until the conclusion of the trial of the individual Barclays executives.  These restrictions were lifted by Lord Justice Popplewell following the acquittal of the three executives in February 2020.Continue Reading The Elusive “Directing Mind and Will”

On 5 February 2020, the UK Court of Appeal dismissed a challenge to the UK’s first Unexplained Wealth Order (UWO). Mrs. Zamira Hajiyeva, wife of the former chair of the International Bank of Azerbaijan who was sentenced to 15 years in jail in 2016 for defrauding the bank out of £2.2 billion, launched a challenge against the UK National Crime Agency’s (NCA) first ever UWO, attempting to overturn the UWO against a property in Knightsbridge, London, purchased for £11.5 million. Her arguments that the NCA mischaracterized her husband’s status as a politically exposed person (PEP) and that her husband’s conviction was the result of a “grossly unfair trial” were rejected by the Court of Appeal. This decision will likely energise and provide a boost to the NCA and other law enforcement agencies in seeking UWOs to seize ill-gotten gains in the future.
Continue Reading UK Court of Appeal Rejects Unexplained Wealth Order Challenge