ICAEW Forensic and Expert Witness Annual Conference 2017 November 2017

Legal Update 2017 - Criminal Eve Giles, Kingsley Napley LLP

Criminal Law Landscape 2017 Introduction and overview Impact on Corporates Impact on Professional Services Impact on Individuals Key legislative developments Money Laundering Regulations 2017 Criminal Finances Act 2017 Finance Act 2016 Sanctions Procedural updates War stories Coming up

Money Laundering Regulations 2017 MLR 2017: Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Replaces MLR 2007 No changes made to principal Money Laundering offences but…there is an increased emphasis on a risk- based approach and emphasis on internal controls and procedures Client Due Diligence: simplified and enhanced Global reach

MLR 2017 cont’d Investigation and enforcement New provisions relating to enforcement and investigation to hold individuals to account for where an individual “not only makes a statement that they KNOW to be false or misleading but where they RECKLESSLY make a statement that is false or misleading.” Guidance Office for Professional Body AML Supervision

Tax evasion – No Safe Havens HMRC 2015 – 2020 Business Plan “We will increase the number of criminal investigations that HMRC can undertake into serious and complex tax crime, focusing particularly on wealthy individuals and corporates, with the aim of increasing prosecutions in this area to 100 a year by the end of the Parliament.” Chancellor Philip Hammond “In this Parliament, the government has announced it will legislate for over 35 measures to tackle avoidance, evasion and aggressive tax planning...”

Tax Evasion - Corporate Failure of Relevant Bodies to prevent tax evasion offence by Associated Persons [Part 3 Criminal Finances Act 2017] Does not alter what is criminal, it focuses on who is held to account – “facilitating” Overcomes “problem” of attributing criminal liability within a company Applies from 30 September 2017 Applies at home and abroad HMRC Guidance 1 September 2017 Unlimited fine Deferred Prosecution Agreement

HMRC Guidance HMRC Guidance September 2017 Be warned – not a checklist Help relevant bodies understand what can be put in place to prevent associated persons from criminally facilitating tax evasion. Based on six principles: Risk assessment Proportionality of risk-based prevention procedures Top level commitment Due diligence Communication (including training) Monitoring and review Be warned – not a checklist Not one-size-fits-all Bespoke procedures needed

Offshore Tax Evasion – individual New offences relating to offshore income, assets and activities [s166 Finance Act 2016] Failing to give notice of liability to income or capital gains tax Failing to provide a return Failing to make an accurate return Entered into force 7 October 2017 Strict Liability Penalty = 6 months imprisonment (and in due course can go up to 12 months) Defence Reasonable excuse Took reasonable care to ensure accuracy

Proceeds of Crime Unexplained Wealth Orders [Part 1: Criminal Finances Act 2017 ] Requires a person who is suspected of involvement in or association with serious criminality to explain the origin of assets that appear to be disproportionate to their known income. Failure to provide a response gives rise to a presumption that the property was recoverable, in order to assist any subsequent civil recovery action. False or misleading statements in response to a UWO = person could be convicted of a criminal offence. Entry into force pending – expected early 2018.

Sanctions The European Union Financial Sanctions (amendment of information provisions) Regulations 2017 Expands the scope of the reporting requirements in existing UK financial sanctions statutory instruments. Covers wide range of professionals and businesses (incl. auditors and external accountants). They will be required to notify the Office of Financial Sanctions Implementation (OFSI) if they know or have reasonable cause to suspect that a person has committed a breach of sanctions related offences or is a person who is the subject of a sanctions-related asset freeze.  Failing to notify OFSI is a criminal offence. The new reporting obligation arises only in respect of information which is received by relevant businesses on or after 8 August 2017

Legal Professional Privilege Under threat? Is the SFO declaring “war on lawyers”? “Co-operation is king” Internal Investigations Lawyers attendance at compelled interviews “s2” SFO v ENRC Re-examined remit of “litigation privilege” in the context of criminal proceedings and in respect of legal advice privilege ENRC has been given leave to appeal Expect decision “before October 2018”

Financial Conduct Authority Financial crime and anti-money laundering remain a key priority for 2017-18 Market Abuse Regime has given the FCA “a richer and more varied market picture” = more cases selected for investigation FCA investigation and enforcement Operation Tabernula Britain’s “biggest Insider-Trading trial” “Painstaking analysis” of trading, financial and communications data, documentary evidence from the investment banks, and the material seized during searches under warrant. Surveillance was also deployed

Practice and Procedure Criminal Procedure Rules – updates 2016 Expert evidence declarations and statements of truths Pre-trial discussion between prosecution and defence experts Statistics on trial…. Joint Guidance from Inns of Court College of Advocacy and Royal Statistical Society. RSS: “More and more fields of expertise are using data. So expert evidence, whether in pre-trial or in court, will increasingly include a statistical element and it is vital that this is used effectively” ICCA: Experts in every type of discipline, appearing in every type of court and tribunal, habitually base their evidence on statistical data. A proper understanding of the way in which statistics can be used – and abused – is an essential tool for every advocate.’ “War Stories” …

Coming up? Rise of the Deferred Prosecution Agreement 4 DPAs to date: Standard Bank (2015) XYZ (2016) Rolls Royce (2017) Tesco (2017) Will be available for corporate offence of facilitating tax evasion Law enforcement/investigating agencies review Future of SFO New Director

Any questions? egiles@kingsleynapley.co.uk