Economic Crime Reports

In late July 2020, both the Serious Fraud Office ("SFO") and National Crime Agency ("NCA") published their annual reports. The reports provide an insight as to the progress made in the past year and the agencies' areas of focus for the near future.

Separately, the British government also issued its Year 2 Update on the UK Anti-corruption Strategy.

SFO annual Report 2019/20

The SFO Report^[1] covers the 12 month period to 31 March 2020 and reflects a mixed year in terms of success for the agency.

A key highlight for the SFO was the deferred prosecution agreement (“DPA”) with global aerospace company Airbus SE, which is the first co-ordinated settlement between UK, US and French authorities. It is also the world's largest resolution for bribery, amounting to a fine plus costs of €3.6 billion, €991 million of which was agreed with the SFO - representing almost double the total amount of all criminal fines in England and Wales in 2018.

Controversially, the SFO is now choosing to report the rate of successful judicial outcomes. As DPAs are now included in this metric, statistics on the SFO's conviction rate are likely to be inflated.

Other highlights for the year include bringing 13 defendants to trial and securing a four-year rate for successful outcomes by case of 95%. By contrast, the four-year rate for successful outcomes by defendant was 62%.

Despite the SFO's seemingly high success rates, five cases were closed without charge and a number of defendants were acquitted, most notably those in the Barclays Qatar matter. Director of the SFO, Lisa Osofsky, has acknowledged that lessons need to be learned from those cases and that, going forward, the SFO "needs to be realistic about the kinds of matters [it's] going to bring."^[2] The Covid-19 pandemic is also likely to result in existing SFO investigations being dropped, as the SFO shifts it focus to economic crimes which have emerged as a result of the pandemic, such as procurement fraud.

Other key statistics include:

The issuance of 629 notices under Section 2 of the Criminal Justice Act 1987. This is particularly low compared to previous years, such as in 2017/18 where the SFO issued 1,031 Section 2 notices;^[3]

The conduct of 21 searches and 345 interviews during the year;

The Proceeds of Crime Division securing £13 million in financial orders. It also received over £7 million in payments from previous orders.

The report also confirmed that the SFO will continue to prioritise strengthening its partnerships with other criminal justice agencies, in the UK and overseas, to tackle cross-border economic crime.

NCA Report

On the face of it, the NCA appears to have had a somewhat more successful year than the SFO. Its report^[4], which also covers the period to 31 March 2020, shows significant improvements in the agency's effectiveness.

The year saw a record-high number of disruptions^[5], a quarter of which were classified as having a "major" or "moderate" impact on serious criminality. There were over 1,000 arrests in the UK, representing a 40% increase on the previous year as well as more than 600 abroad.

The NCA secured the conviction of 376 criminals, representing a 94% successful court conviction rate. Its activities resulted in the forfeiture of £9 million worth of cash and the seizure of a further £9 million. It also obtained freezing orders over bank accounts holding more than £145 million.

The report reflects upon the apparent success of the National Economic Crime Centre ("NECC"), which was launched in October 2018. The NECC made 56 arrests, secured the closure of 3,740 bank accounts and restrained or seized nearly £3.4 million in funds. The year also saw the first use of Unexplained Wealth Orders ("UWO"), a type of UK court order requiring a person to explain how particular assets were acquired. Not covered in the report, however, is the NCA's recent defeat in appealing against the dismissal of three UWOs.

In the report, the Home Secretary noted that the NCA will need to continue to evolve to keep up with the growing scale and complexity of serious and organised crime. The report also confirmed that the full impact of the COVID-19 pandemic on serious organised crime remains unknown and that next year's report will give more detail in this regard.

Year 2 Update on UK Anti-corruption Strategy

In December 2017, the government published its five-year UK Anti-corruption Strategy. The Year 2 Update reports on the progress that was made in 2019, noting it was a "difficult year" which presented a number of challenges.

The reported successes include securing long-term funding for the Strategy and the use of freezing orders and UWOs to seize property obtained through corrupt means. Another highlight was the Office of Financial Sanctions Implementation ("OFSI") issuing the first financial penalty - a fine of £20.47 million on Standard Chartered - for breaching EU sectoral sanctions on Russia.

On the flipside, the update acknowledges that the government is not on track to satisfy several of the Strategy’s specific commitments. Of those where progress has been inadequate, the most significant, we suggest, are: (i) the failure to assist countries to have in place a beneficial ownership disclosure requirement in their public procurement by 2020; and (ii) the delay to the Overseas Entities Bill.

The government's stated focus for next year includes (again): reforming the approach to Suspicious Activity Reports; increasing the NCA and NECC capabilities; and passing the Overseas Entities Bill.

Comment

Overall, the UK saw mixed results in its efforts against economic crime during the 2019-2020 period. Whilst the enforcement agencies certainly had some notable successes, the SFO’s failure to secure certain prosecutions, the NCA's recent UWO setback and certain missed deadlines under the Anti-Corruption Strategy serve to emphasise that there remains a long way to go.

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^[1] SFO Annual Report and Accounts 2019-2020 (https://www.sfo.gov.uk/download/annual-report-2019-2020/), accessed 24 July 2020.

^[2] "I'm not in the business of get out of jail free cards", The Telegraph 25 July 2020 (https://www.telegraph.co.uk/business/2020/07/25/not-business-get-jail-free-cards-says-lisaosofsky/), accessed 28 July 2020.

^[3] Serious Fraud Office Response to Freedom of Information Request on Section 2 Notice, September 2018 (https://www.sfo.gov.uk/publications/corporate-information/freedom-of-information-2/freedom-of-information/), accessed 24 July 2020.

^[4] NCA Annual Report and Accounts, 2019/20 (https://www.nationalcrimeagency.gov.uk/who-we-are/publications/467-national-crime-agency-annual-report-and-accounts-2019-20/file), accessed 24 July 2020.

^[5] 'Disruptions' refers to event-based disruptions, assessing the impact of law enforcement activity against an organised crime group, key individual or specific vulnerability.

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