FINANCIAL CRIME: INDIVIDUALS: An Introduction

Current Challenges for the UK Legal System 

Are prosecutions over? 

Does the UK even prosecute its fraudsters any more? Casual observers could be forgiven for asking the question, given that headlines from the UK about fraud, bribery, and other forms of financial crime tend to focus not on convictions of individuals, but on convictions of, or Deferred Prosecution Agreements (DPAs) reached with, corporates, and on acquittals or collapsed cases for individual defendants. Indeed, in a startling number of cases – including G4S, Tesco, and Serco – those apparently contradictory results have arisen from the same set of facts. However, such headlines should not lead suspects to be complacent about the risks they still face from allegations of financial crime.

Some difficult results 

The risk from corporate prosecutions and DPAs is, by now, abundantly clear. It is hard to escape the conclusion that the Serious Fraud Office (SFO), in particular, is prioritising securing these, and that companies may be tempted to admit guilt (or, more to the point, the guilt of individuals involved) for reasons of commercial certainty and pragmatism, while the fate and reputation of the individuals concerned seem to be afforded a somewhat lower priority. Where it suits the interests of both the corporate and law enforcement to blame an individual, the need for that individual to fight their corner, whether in the context of a prosecution or otherwise, is even stronger than usual. Acquittals, though common in these cases so far, should certainly not be taken for granted.

Convictions of individuals in SFO cases, meanwhile, remain comparatively rare. The acquittals of executives of Barclays, accused of making unlawful deals with entities associated with the government of Qatar, even in circumstances where those deals appeared to have been approved by the company’s board and its lawyers, took the jury barely a day to reach. Notoriously, the result of the Unaoil case was complicated, with three defendants’ convictions overturned, and remarkably critical remarks from the judge (followed by an excoriating report by Sir David Calvert-Smith, about the methods used by the SFO and its then director, Lisa Osofsky, to seek to persuade individuals to plead guilty. It is to be hoped and expected that the agency, under its new director, Nick Ephgrave, will tread more carefully in future in its effort to convict individuals.

Civil recovery and sanctions 

Meanwhile, the scope for the state to pursue assets, even outside the criminal process, is ever increasing. Civil recovery is an increasingly popular tool in financial crime cases, particularly where funds in bank accounts are thought to represent the proceeds of unlawful conduct. Financial sanctions are also an increasing feature of the financial crime landscape, thanks to anti-corruption sanctions, rhetoric about “dirty” Russian money, and an increasing appetite from the state to move from temporarily freezing assets to permanent forfeiture, including by pursuing cases of suspected breach and circumvention.

Going private 

It is worth noting, too, the rise of private prosecutions, which are an increasingly important part of the landscape of criminal litigation, and arguably find their most appropriate utility in cases of financial crime. Much as a victim of fraud might prefer to see their case adopted with competence and vigour by an agency of the state, the reality for some years now has been that this is often not the result. Instead, a victim with the financial resources to take on the task of prosecuting is likely to have to do just that, or else fall back on civil remedies, or simply shrug off their losses and move on.

The flipside of this for a defendant is that they may face not the dreaded machinery of the state, but a modern, nimble, private firm straining to do their best for their client. In this context, the need for such firms to play that role well, not only with the utmost professionalism but with the broader interests of justice firmly in mind, is both obvious and vital. The publication of the Code for Private Prosecutors, a creature of the Private Prosecutors’ Association, is a welcome step forward in addressing that need. The scandal of the Post Office’s multiple prosecutions of postmasters remains a salutary lesson about the risks posed when a private prosecutor is the entity said to be the victim of alleged offences.

Complexity and fairness 

In fairness to prosecutors, it is perhaps inevitable that the cases making national and international headlines will be the more complex ones, and often those where the presence of criminality is most open to question. The allegations arising from Cum-Ex trading, for example, which exploited tax rebate systems in the EU, are both exceptionally serious in terms of the amounts involved, and exceptionally contentious in terms of which laws, if any, were broken. Where the SFO prosecutes individuals in cases of more straightforward, albeit substantial, financial crime, it can achieve results – as it did in 2022 against David Ames, convicted of fraudulent sales of Caribbean luxury resorts (worth GBP226 million), and against Andrew Skeene and Omari Bowers, who sold shares in Amazon rainforest plantations (GBP37 million). A more substantial victory, against former executives of Balli Steel, was achieved in 2023.

Amid all this, a class of less serious, less complex cases is at risk of flying under the radar – cases that fall between the high-value and/or international focus of the SFO, and the fragmented specialisms and resources of the UK’s myriad of other law enforcement agencies. The failure of Action Fraud, set up as a national gateway for reporting, and the faltering start for the Public Sector Fraud Authority, originally billed as a way to tackle fraud arising from COVID-19 support schemes, have contributed to a rethink on how this class of financial crime is tackled.

Dropping the ball 

The banks, it seems, are set to play an increasing role in tackling low- and mid-level fraud. While sending endless Suspicious Activity Reports (SARs) to the National Crime Agency (NCA), they have become experts in spotting at least the first signs that fraud has taken place, and of course are well placed to freeze monies they believe are suspect. Other businesses in the regulated sector, including solicitors, are increasingly criticised for playing a notably less active role.

The real dilemma for our system is that, after the banks have passed the ball in the NCA’s direction, there is often no law enforcement agency to catch it, and the intelligence from SARs sits unused in a database. While that is clearly a problem for taxpayers insofar as it leaves frauds to go on without attention, it is also a problem for customers whose funds are frozen without explanation. Besides perhaps a handful of fraudsters, who may rejoice that their chances of going to prison are low, a strategy that puts too low a priority on financial crime does a disservice to everyone involved.