Investigatory and prosecuting authorities

Section 2 of the CJA permits the Director of the SFO (“the Director”), or individuals designated by the Director to: (i) compel a person to answer questions “or otherwise furnish information”, usually by requiring them to attend interview; or (ii) compel the production of specified documents and records in any form and, if necessary, explain them or explain where they might be. The threshold for the Director ordering the compulsion of documents or attendance at interview is low, and requires only that it “appears to” the Director “that there is good reason to do so for the purpose of investigating the affairs, or any aspect of the affairs, of any person”. However, a person cannot be compelled to answer questions or produce documents where protected by legal professional privilege.  Further, any evidence provided by a person in compliance with such a Notice cannot generally be used in evidence against them.

The Court can order a search warrant to enforce a request of the Director under Section 2, where there are reasonable grounds for believing that the Director’s request has been frustrated for specified reasons. These powers may also be exercised at the request of foreign governments.

It is a criminal offence to (i) fail to comply with a section 2 Notice without a reasonable excuse; (ii) knowingly or recklessly make a false statement in response to a section 2 Notice; (iii) falsify, conceal, destroy or otherwise dispose of documents, knowing or suspecting that those documents would be relevant to an SFO investigation; (iv) “causing or permitting” the falsification, etc. of such documents. These offences are punishable by a maximum sentence of imprisonment of up to 6 months, 2 years and 7 years respectively. 

Section 2A extends the powers in Section 2 to the “pre-investigation” stage in relation to suspected offending under the ”general” and FPO offences at sections 1,2 and 6 of the Bribery Act 2010. In such cases, a Section 2 notice can be issued where “it appears to the Director” that it would be “expedient” to request the information or attendance at interview for the purpose of deciding whether or not to start an investigation into serious or complex fraud.

The Director has a wide discretion under section 3 CJA 1987 to share the information obtained by a section 2 notice, either with other branches of government or law enforcement, or by agreement to any other person, provided that the Director specifies the uses to which the material can be put. 

CROs can be sought in the High Court or Crown Court. They provide for the recovery of property where, on the lower civil standard of proof, it can be established that such property was obtained through unlawful conduct. There is no requirement to obtain a criminal conviction first. On 26 October 2009, the SFO obtained a CRO of almost £5 million against construction firm AMEC plc. The Director of the SFO, Richard Alderman, had determined that AMEC had failed to comply with its obligations to keep accurate accounts pursuant to section 221 of the Companies Act 1985. This followed an internal investigation (and subsequent self-reporting to the SFO) regarding irregular payments made between November 2005 and March 2007 in connection with a Korean bridge-building project in which AMEC was a shareholder.

SCPOs are civil orders intended to prevent, restrict or disrupt involvement in serious crime.  As Richard Alderman explained in a speech he gave on 26 February 2009: “[SCPOs] enable prosecutors to obtain court orders regulating the future conduct of those who have been engaged in serious crime. SCPOs can be obtained before or after a conviction. The conditions that can attach to such orders are almost limitless. A company might, for example, be asked to submit its trading accounts for scrutiny every six months.” On 20 March 2009, the SFO obtained its first SCPO in a prosecution against Haroon Khatab, for his involvement in a boiler room fraud. The order severely restricted Mr Khatab’s ability to become involved in investment and financial management. For example, it prevents him from directly or indirectly offering to sell shares, investment opportunities or financial products of any kind for a four-year period.

Confiscation Orders are a post-conviction remedy. Broadly speaking, the purpose of a confiscation order is to prevent an offender from benefiting from the proceeds of their crime by confiscating an amount which is the lesser of the “benefit” which they have obtained from their criminal conduct and their “available assets” (i.e. the offender’s gross assets less secured liabilities). The computation of “benefit” is complex.  Where the offender has a “criminal lifestyle” pursuant to section 75 of POCA, then “benefit” comprises: (i) the benefit derived from the offence(s) of which the offender has been convicted; (ii) the benefit calculated under certain statutory assumptions with regard to income and expenditure; and (iii) the benefit of any earlier criminal conduct at any time which can be proved to the civil standard of proof. When considering whether an offender has a “criminal lifestyle”, the assumptions that the court will make can have the effect that any profits and revenue earned by the offender can be confiscated, unless there is cogent evidence to the contrary, or if there is otherwise a serious risk of injustice.

DPAs allow corporates to reach a court-approved agreement with the prosecuting authorities in relation to economic crime (i.e. fraud, bribery, money laundering). The corporate avoids criminal conviction and receives a lower financial penalty than might otherwise have been imposed (perhaps up to a 50% reduction depending on the circumstances) in return for co-operating with the authorities and agreeing to various obligations, including payment of fines, putting controls in place, being subject to external monitoring etc. The concept is similar to that already established in the US but involves more judicial oversight.  Some of the largest financial resolutions of economic crimes by corporates have been resolved in this way since DPAs became an available tool in 2014.

These relatively recent powers, introduced as part of the suite of powers within POCA by the Criminal Finances Act 2017, permit law enforcement authorities to interrogate the source of, and seize private property, without having to prosecute any criminal offence. Where the authorities suspect either: (i) a person is ‘politically exposed’; or (ii) the involvement by a person or their close associates in serious crime, an Unexplained Wealth Order can be obtained in respect of property worth over £100,000, requiring the suspect to explain how they came to obtain that property.  The authorities may, depending upon the explanation received (or a failure to give an explanation), also seek further orders to freeze and / or seize the property in question. The wide scope of the powers withstood rigorous challenge in both the High Court and the Court of Appeal in the leading case of Zamira Hajiyeva v National Crime Agency [2020] EWCA Civ 108, which also provided guidance on the scope of the powers.  

Account Freezing and Forfeiture Orders are civil law orders made by the criminal courts and, since their introduction in 2018, have become a favoured resource of law enforcement. For example, in the 2021/2022  financial year, a total of 1,100 Account Freezing Orders were obtained by law enforcement agencies countrywide, freezing a total of a total of £132m. 

Account Freezing Orders permit the Court to prohibit a person from making withdrawals to or payments from a specified account, where the Court is satisfied that there are reasonable grounds for suspecting that all or part of the money held in the account is either property obtained through unlawful conduct, or intended for use in unlawful conduct. Such applications may only be made with the authorisation of senior officers within enforcement agencies (including the National Crime Agency, Serious Fraud Office and HMRC) and may not be made in respect of accounts holding less than £1000. However, as the threshold for granting the orders is low, the orders themselves can last for up to two years, and can be obtained without notice, these orders present a significant advantage to law enforcement with minimal ongoing oversight by the Court. 

Account Forfeiture Orders are the close cousin of Account Freezing Orders, and permit law enforcement to apply for the forfeiture of frozen accounts. Whilst the threshold for making these orders is higher than for Account Freezing Orders, in that the Court must be satisfied ‘on the balance of probabilities’, a higher bar than for Account Freezing Orders, and they must be made with 30 days’ notice, these orders can be made in the absence of any criminal conviction, and carry with them a criminal penalty for breach. 

There are a variety of legal bases on which both Account Freezing and Account Forfeiture Orders can set aside or varied, and a range of practical approaches which with expert advice might result in substantial reductions to the amounts to be restricted.