The Economic Crime and Corporate Transparency Act 2023 (the Act) has extended the use of the SFO’s powers of compulsion before a case is formally taken on by the agency. The Act has also introduced the failure to prevent fraud offence and evolved the identification doctrine by now holding 'senior managers' accountable for certain financial crimes. Paul Chadwick reports on the SFO’s new powers below.
Previously under section 2A of the Criminal Justice Act 1987, the SFO had limitations in only being able to obtain documents and information related to suspected international bribery before the Director formally authorised a full investigation.
Under section 211 of the Act, the SFO is now able to use its section 2A power to compel businesses and individuals to provide such material before formally commencing an investigation into suspected fraud and domestic bribery. Consequently, we can expect to see an increase in ‘Section 2 Notices’ being issued by the SFO.
This power which can be utilised to obtain specific documents and information in short order, overrides regulatory, confidentiality and data protection obligations businesses might otherwise have (although not legal professional privilege).
It sounds like a simple and sensible enough idea alongside the advent of the new fraud offence but, as well as shorter term benefits to the process for taking on the right case, the opportunity this new power provides may have longer term repercussions for the SFO and those it serves.
On the one hand, a decision whether to open a case to be progressed by a case team will be better informed. This means more focussed cases can be commenced by the new Director, with a higher chance of producing results for the SFO. Logically, there will also be fewer cases closed and less use of the SFO’s valuable time and resources wasted.
In addition to these clear benefits to efficiency, it will also lead to better detection of assets suspects have acquired through criminal activities at an earlier stage. Other agencies might also benefit from material acquired by the SFO under this power, if the SFO can share it under its statutory gateway.
However, enhanced screening capabilities could potentially lead to a higher number of cases being officially approved by the SFO, resulting in a greater workload for its operational divisions. This is against a backdrop of lengthy delays in the criminal justice system and getting cases to trial generally which presumably there will be a greater need for.
An increased operational case load will place significant demand and strain on all SFO staff, including its digital forensics, proceeds of crime, and mutual legal assistance departments. More cases will require more disclosure projects.
With the arrival of this new power finally coming to the SFO and the appointment of a new Director, there comes a greater responsibility for them and those that oversee the agency’s remit, to preserve the integrity of the additional cases the SFO takes on.
The new Director will no doubt be keen to utilise this new legislative tool and set the tone from the start as they have with the volume of cases and dawn raids they have authorised under their tenure already.
However, the SFO can ill afford to be overconfident in using it at the expense of over stressing its own workforce and jeopardising its long-term chances of successfully prosecuting cases for the victims of financial crime.