Included in this issue: PRA and FCA to update Policy Statement governing investigation and enforcement; Law Commission report reviews the offences which need to be disclosed during criminal record checks; Congress repeals anti-graft rule; and more...


PRA and FCA to update Policy Statement governing investigation and enforcement

The FCA and PRA have published a press release detailing the final changes being made to their Policy Statement. The changes are designed to improve the effectiveness and transparency of FCA and PRA enforcement process.

The main changes being made as a result of this updated Policy Statement include better transparency surrounding referrals for investigation, more frequent updates to stakeholders throughout the lifecycle of investigations, improving dialogue between enforcers and supervisors and providing better guidance around the practical steps and processes of joint PRA/FCA investigations.

The FCA, 1 February 2017

Law Commission report reviews the offences which need to be disclosed during criminal record checks

The Law Commission have released a report this week which reviews the law surrounding which offences must be disclosed and which may be filtered out of a criminal records check. 

The current law means that in most circumstances "spent" convictions need not be disclosed, however in certain circumstances, for instance when the safeguarding of children is in issue, a request can be made for a criminal record certificate. Since 2013, a mechanism was introduced to filter which convictions needed to be included in such a certificate and to dispense with certain minor or old convictions. This mechanism is considered complicated and unwieldy, making it difficult for individuals to understand which convictions they are required to disclose and in what circumstances.

The report set out recommendations for a new system which effectively dealt with safeguarding risks but also prevented the disadvantageous disclosure of unnecessary minor offences., 31 January 2017

Bribery and Corruption

Congress repeals anti-graft rule

The US congress voted to repeal the Security and Exchange Committee's "Cardin Lugar" rule last week which had previously required American companies in the energy sector to disclose payments made to foreign governments.
Over the last two years it is estimated that $150 billion of payments have been disclosed under the rule. However, US companies complained that it made them less competitive than some of their peers who were not subjected to the same standards (although many including EU members are subject to similar rules). There are concerns from some that the repeal of this rule will make it harder for investors to understand the bribery risks of energy companies they are considering investing in.

The Telegraph, 4 February 2017

Top Kenyan officials arrested over voting scandal

The former chief executive of the Kenyan electoral commission, James Oswago, was arrested on Wednesday along with two other men for allegedly receiving bribes from a British printing company who had previously been granted contracts by the Kenyan government to print election materials. 

The British printing company, Smith and Ouzman Ltd, was separately convicted in the UK after an SFO investigation found that the chairman of the firm had paid nearly £500,000 in bribes.

Oswago maintains his innocence and claims that he is being targeted so that the Kenyan public believe President Kenyatts's administration is tackling corruption.

Reuters, 8 February 2017

Engineering company Bechtel accused of bribery

Engineering giant Bechtel, whose portfolio of work includes Crossrail, HS1 and the Channel Tunnel has been embroiled this week in a family feud, part of which accuses Bechtel of bribery. 

As part of Sana Hassab Sabbagh's legal battle to inherit a share of her late father's fortune from the Middle Eastern based Consolidated Contractors Company (CCC), Sabbagh's legal team allege that Bechtel was involved in contributing to a payout by CCC to three Saudi princes in order to bribe them into acting as a front for CCC so that they could appear as domestic to Saudi Arabia and circumvent local laws. Bechtel has denied the allegations.

The Telegraph, 6 February 2017

Counter Terrorism

Government White Paper addresses issue of anti-crime and terrorism measures post-Brexit

The government have published a White Paper dealing with the UK's exit from and new partnership with the European Union. Chapter 11 of the paper dealt with how the UK will continue to co-ordinate and cooperate with EU member states, and bodies such as Europol and the European Judicial Network, once we have left the union. 

The White Paper emphasised the need to work closely with EU and other states, sharing information and supporting each other's' efforts, in order to combat crime and terrorism. The paper highlighted the fact that a number of key "European Partners" have already signalled their commitment so continuing cooperating with the UK especially in light of the recent terrorist attacks. However, the paper did not canvas which existing laws would be preserved, or whether membership of bodies such as Europol will be sought., February 2017

Money Laundering

Coutts fined 6.5 million Swiss francs for money laundering failures

Coutts & Co has been ordered to pay 6.5 million Swiss francs ($6.56 million) to Swiss watchdog FINMA last week for breaching money laundering regulations. The bank has already faced a penalty of 2.4 million Singapore dollars from Singapore's central bank as a result of related AML failures.

According to FINMA, the bank failed to properly investigate or question the circumstances around a number of business relationships which involved "unusually large and high-risk transactions" which allowed $2.4 billion worth of assets to flow through the Swiss accounts. In addition, it failed to follow up suspicious activity internally or report this activity to the Swiss authorities until the spring of 2015.

Reuters, 2 February 2017

US banks predict Trump will take hard line on anti-money laundering regulations

According to chief executive of Promontory Financial Group and former head of the Office of the Comptroller of the Currency, Gener Ludwig, AML efforts will remain “a serious area of focus” for the Trump administration, despite President Trump's executive order establishing a "one in, two out" rule for new US regulations.

This is supported by recent market events which saw Investors Bancorp, a New Jersey bank, standing-down an attempt to buy a local competitor because it could not satisfy the Federal Deposit Insurance Corporation that its anti-money laundering systems were up to scratch; and the Federal Reserve joining efforts with the FCIX to demand BB&T, a Texas based company, to fix "significant deficiencies" in its Anti-money laundering compliance policies.

The Financial Times, 1 February 2017


Six city traders appear in court for Euribor rigging

Six city traders from Deutsche Bank and Barclays have plead not guilty this week at Southwark Crown Court to charges of conspiracy to defraud regarding manipulating Euribor between 2005 and 2009. 

The traders are alleged to have submitted false rates in order to artificially influence Euribor, the euro equivalent of LIBOR, which benchmarks the price of global financial products.

The trial is due to start in September.

The Telegraph, 7 February 2017

SFO find four guilty of £160m fraud

On Tuesday four individuals were found guilty, at Southwark Crown Court, of conspiracy to commit fraud and make corrupt payments.

Stephen Dartnell and George Alexander of Total Asset Finance (TAF) along with Carl Cumiskey of H20 and Simon Mundy of KBC were found guilty of selling fake or inflated contracts for fibre-optic cables to Barclays Bank and KBC. The fraud, which operated from 2007 and 2010 is believed to have amounted to almost £160m.

It was revealed during the trial that Mundy was paid almost £900,000 in order to process funding payments from KBC to TAF. Two other defendants were acquitted of all charges.

The SFO, 7 February 2017

SEC accuse trader of stealing $5m from client accounts

New Jersey based investment advisor, Barry Connell, has been charged by the SEC with stealing approximately $5 million from client accounts of the major financial institution for which he worked.

Connell allegedly used his position to falsely authorise more than 100 transactions, diverting money from client accounts to pay for his own personal expenses including membership for a country club, private jet service and rent for his home in Las Vegas.

In addition to the SEC complaint, the US Attorney’s Office for the Southern District of New York also filed criminal charges against Connell earlier this week.

SEC, 3 February 2017

Healthcare provider agrees $60 million penalty for overcharging medical services

The successors to IPC healthcare service providers, TeamHealth, have this week agreed to pay $60 million in settlement of claims that IPC deliberately billed more than was due for the services performed for primary healthcare providers such as Medicaid and the Defense Health Agency.

This process of overcharging, known as "upcoding", is a breach of the U.S. False Claims Act. In order to settle the claims TeamHealth agreed to pay the fine of $60 million and also to enter into a five year Corporate Integrity Agreement (CIA) with the US Department of Health designed to help detect and avoid any future fraud by improving the company's accountability and transparency.

Department of Justice, 6 February 2017


In wake of new US sanctions Iran completes new ballistics tests

According to reports Iran conducted missile tests of a defensive surface to air (SAM) rocket from central Iran earlier this week. These ballistics tests come just a few days after President Donald Trump announced extended sanctions against 13 new Iranian individuals and 12 entities in response to an earlier ballistics test of a mid-range missile in Iran in January.

Iran contends that neither of these tests breached the nuclear deal brokered under the Obama administration as the missiles were not capable of carrying a nuclear warhead.

Trump has warned that going forward the US will take a tougher approach towards breaches of sanctions.

The Independent, 9 February 2017

Netanyahu urges Britain to join sanctions against Iran

On his visit to London this week, Israel's Prime Minister, Benjamin Netanyahu, has urged "responsible nations" to join the US in imposing new sanctions against Iran following recent ballistic missile testing by the country.

In a speech on Monday, Netanyahu announced that "Iran seeks to annihilate Israel" and "Iran's aggression [should] not go unanswered". Nevertheless, Theresa May has responded that the U.K. must support the nuclear deal with Iran that the U.K. have already agreed but that we must, however, "rigorously monitor" Iran's behaviour.

Reuters, 6 February 2017

White House official says lifting Russian sanctions would not be a "smart" move

Newly appointed deputy assistant to the president for strategic planning, Kevin Harrington, stated that it was only proper for a new administration to take stock and "look at things from fresh angles" but that did not mean it would be "smart" for the U.S. to drop sanctions against Russia when there had been no improvement in behaviour.

Despite signs that Trump was keen to reduce sanctions against Russia in the first few weeks of his administration, Trump seems to have retreated from this position slightly, after lobbying from the British PM and from Republicans in congress, stating that it was "very early" to begin considering sanctions relief on the Kremlin.

The Guardian, 6 February 2017

Health and Safety

Packaging supplier fined £400,000 for employee conveyor belt injury

A packaging supplier has been fined after an employee was pulled into machinery whilst carrying out repairs.

The employee was undertaking work on the printing machine when he put his foot onto an exposed conveyor and was dragged into the machines moving parts.

Diamond Box Ltd pleaded guilty to a breach of Section 2(1) of the Health and Safety at Work etc. Act 1974 and was fined £400,000 plus £9886.04 costs.

SHP, 1 February 2017

Key Contacts

Nichola Peters

Nichola Peters

Partner, Global Investigations

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Erin Shoesmith

Erin Shoesmith

Partner, Health & Safety
United Kingdom

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