Business Crime Defence 2018: Discussion

Who’s Who Legal brings together four leading experts to discuss issues facing business crime defence lawyers and their clients in the industry today.

Have there been any significant legal and regulatory developments in your jurisdiction over the past 12 months? How has this affected your practice?

Robbert de Bree: The developments over the past 12 months mainly lie in the area of enforcement. We have seen a continuing focus on enforcement in the field of foreign corruption and the public prosecution service changing in this area to a more proactive enforcement agency. The approach of the public prosecution service has shifted to an active search for corruption cases based on red flags. At the same time, enforcement of economic sanctions breaches (such as those in relation to Iran, and to Russia and the Crimea) are on the rise. Traditional areas of money laundering, tax fraud and environmental criminal cases remain unrelentingly the topic of enforcement as well. All of this has meant two things over the past 12 months. First, much attention in the practice, and practice groups, has been on dawn raids, preliminary procedural issues in investigations (such as legal privilege safeguards in seizures) and court representation. Second, many corporations (noting the enforcement trend) have required detailed advice on compliance in the field of anti-corruption and anti-fraud measures.

Kenan Furlong: New anti-corruption legislation has just been enacted in Ireland and since, the Criminal Justice (Corruption Offences) Act 2018 came into effect on 30 July 2018. This legislation consolidates and modernises Ireland’s anti-bribery and corruption laws. The key change is the introduction of a new corporate offence. This provides that a company may be liable to prosecution for corrupt acts by a director, manager, employee, agent or subsidiary to further the company’s interests. The only defence available to a company is to show that it took “all reasonable steps” and exercised “all due diligence” to prevent that corruption. Companies will now need to proactively assess their corruption risk and take all reasonable steps to mitigate that risk so they can avail of the defence outlined above if necessary.

New anti-money laundering (AML) legislation has recently been published and is due to be enacted before the end of 2018. The new Bill gives effect to the Fourth Money Laundering Directive (Directive (EU) 2015/849 (4AMLD)) and proposes a range of amendments to existing AML legislation. A clear focus of the new Bill, in line with 4AMLD, is on applying more rigour to AML compliance through a “risk-based” approach. The Bill will oblige designated persons to conduct a risk assessment of the money laundering and terrorist-financing risks involved in carrying out their business. The Bill will also require designated persons to assess the money laundering and terrorist-financing risks associated with each individual customer, in order to inform the due diligence applied to that customer. This is a move away from the “rules-based” approach of the current legislation, which allows simplified customer due diligence to be applied to specific categories of customers perceived as presenting low money laundering and terrorist-financing risk. In many cases, these new obligations are already being complied with in practice. However, the new Bill places them on a statutory footing and provides for penalties and sanctions for failure to comply with the requirements. In September 2017 Ireland came under increased scrutiny in respect of its AML regime following the mutual evaluation report carried out by the Financial Action Task Force (FATF). Although there were many positive findings in the report, it was critical of Ireland’s failure to secure AML convictions after trial. It remains to be seen if the report will lead to increased prosecutions for money laundering offences.

Saverio Lembo: Switzerland saw no major legal regulatory developments over the past 12 months.

There are, however, some interesting developments in the way criminal authorities handle criminal corporate liability proceedings. These developments were triggered by the Swiss Post case back in 2016. In this decision, the Swiss Federal Supreme Court (FSC) held that the fulfilment of the necessary conditions triggering corporate liability could not be proven in case of absence or abandonment of prosecution against individual perpetrators of an underlying offence. Accordingly, the FSC acquitted the Swiss Post. In light of this decision, prosecuting authorities are no longer eager to abandon proceedings against individuals or focus their investigation exclusively on the company. On the contrary, when criminal corporate liability is at stake, prosecutors are henceforth eager to find a scapegoat and prosecute individuals in order to circumvent the hurdle of the Swiss Post case.

Matthew Reinhard: In the USA, the outcome of the 2016 presidential election had many business crime defence lawyers asking whether white-collar crime would remain a focus of federal law enforcement agencies. While the past two years have not shown any appreciable slowdown in enforcement efforts and investigations, we have seen an increased willingness by the enforcement agencies to decline to prosecute corporate entities where the corporate has voluntarily disclosed wrongdoing. For instance, with regards to FCPA cases, in late 2017, the DOJ unveiled a new policy stating that, except in certain specified instances, there would be a presumption that the DOJ would decline to prosecute a company where the corporate voluntarily disclosed wrongdoing and cooperated with any subsequent DOJ investigation. While the DOJ may decline to prosecute in such instances, it may still seek to have the corporate disgorge (to the US Treasury) any ill-gotten gains attributable to corrupt actions – a practice known as “declination with disgorgement”.


Over the course of our research, sources have noted a greater emphasis on corporate compliance. In your opinion, what are the key features of an effective compliance programme, and what steps must practitioners take to successfully deliver them?

Robbert de Bree: Corporate compliance assistance is by now a core task we fulfil and have done so for over a decade. That is because our in-depth knowledge of criminal enforcement makes us well placed to assess and advise and compliance in that field. Corporations have noted this expertise and are keen to make use of this assistance.

The key to a proper functioning corporate compliance programme is that it must be simple to understand and to execute. It requires:

  • commitment from the organisation, including foremost from its top-level management;
  • an assessment of the risks of the organisation (which must be repeated and reviewed);
  • procedures and policies setting out the rules and giving clear guidance on expected and prohibited conduct;
  • due diligence on relevant actors, including third parties;
  • dedicated implementation and continuing attention for compliance, focusing also on the culture of the organisation; and
  • periodic review and monitoring of risks and of the programme generally.

Practitioners will have added value for corporations if they have clear experience in setting up a compliance programme; understand how the corporation operates; and are experienced in litigation and enforcement, as the latter particularly helps them to understand where compliance is most required, as well as which compliance measures are effective and which aren’t.

Kenan Furlong: A company is best placed to assess its own risk. Irish regulators increasingly expect companies to act as the first line of defence in the fight against economic crime.

The most important aspect of an effective compliance programme is a detailed and informed risk assessment. If the risk assessment is flawed, the compliance programme will be too.

A comprehensive risk assessment is a key feature of compliance with the new anti-corruption and AML regimes referred to above. In particular, the new AML Bill obliges designated persons to prepare a formal business risk assessment, which must be approved by senior management and kept up to date. Dedicated training on, and monitoring of adherence to, the risk assessment is key to an effective compliance programme.

Saverio Lembo: One of the requirements to be met in order for a corporation to be criminally convicted according to article 102 of the Swiss Criminal Code is a deficient organisational framework. Consequently, the stronger the compliance programme developed by the corporation, the more the latter limits its exposure to criminal liability.

There is obviously no universal and standard compliance programme. This means that a corporation should put in place an individual approach adapted namely to structure, size and risks of activities involved. Codes of conduct, in-house training, implementation of a whistle-blowing system, organisational regulations and internal guidelines (which reflect AML, anti-corruption and other relevant legislation) should lie at the core of compliance programmes.

Matthew Reinhard: There are many factors that make up a successful corporate compliance programme that will not only detect, stop and remediate wrongdoing but also satisfy regulators that the corporate has implemented an effective programme. In my opinion, two of the most important factors are cultural: the “tone at the top” and a dedication to continuous improvement. First, the corporate leadership at the C-suite and board level must demonstrate a genuine and visible commitment to corporate compliance. It must be more than a vague statement about “company values” – instead, it must be a clear and regular demonstration of how the company’s business decisions reflect and incorporate its commitment to compliance. Second, corporates must be continually monitoring and improving their compliance programmes. Compliance threats evolve, and corporates must recognise that programme elements that worked well even two or three years ago may now be compromised, inefficient or outmoded.


How is the increased global cooperation between enforcement agencies affecting the strength and efficiency of investigations?

Robbert de Bree: The world is certainly becoming smaller in the sense of enforcement, given the increased cooperation between enforcement agencies. Some of that enforcement is still traditional (for instance, through mutual legal assistance treaties); much of it, however, is modern and aimed at being effective (for instance, in joint investigation teams and/or by dividing the cases among jurisdictions and making use of each other’s information). Investigations are certainly becoming more effective because of this development on the side of enforcement agencies.

This provides a clear challenge for defence practitioners who must step up their efforts in order to provide a counterweight. It means practitioners must cooperate more often and more closely with their colleagues abroad, and must thus be able to identify the best colleagues to team up with. It also encompasses a need for more and clearer coordination on behalf of defence practitioners. Equally, practitioners must spend time and effort in understanding foreign systems and their enforcement. All of this culminates in the requirement to strategise in transnational enforcement investigations, in order to achieve the best result across all jurisdictions.

Kenan Furlong: We are seeing a continuing trend for increased cooperation between regulators in different jurisdictions. Lawyers practising in this space must advise clients of the potential “downstream” consequences of steps taken in their jurisdiction on an investigation in another jurisdiction.

Saverio Lembo: It is a fact that enforcement agencies are increasingly joining forces in transnational investigations. A clear example is the cooperation between Swiss and Brazilian authorities in the Car Wash investigation. The Attorney General of Switzerland announced through press releases that Swiss prosecutors were having meetings with their Brazilian counterparts in order to coordinate their efforts. The same scenario has been observed in other cases such as FIFA and 1MDB. This situation should prompt defence counsels to also coordinate their actions, in the same ways as the enforcement agencies. It is thus of paramount importance that counsels defending clients in various jurisdictions meet and coordinate an international defence strategy for the client. This coordination should ensure, in particular, that the client is not punished twice for the same offence.

Matthew Reinhard: Frankly, I’m not sure it is doing either. While international cooperation has certainly proven a boon to enforcement agencies and national treasuries, particularly in countries where corporate criminal enforcement is still in its infancy, the rise of cross-border cooperation has placed additional stress on international corporates seeking to conduct internal investigations and negotiate with enforcement officials. First, it requires corporates to retain counsel across a variety of jurisdictions, with accordingly increased costs. Second, multiple counsel must now coordinate and cooperate across international legal regimes. This is particularly fraught given the apparent eroding of the attorney-client privilege (and other privileges) in the UK and the EU in internal investigations. Corporates are increasingly faced with the prospect that what might be necessary in one jurisdiction could be harmful in another. Balancing these competing factors will continue to be a major challenge as cross-border investigations and enforcement actions increase.


In an increasingly crowded marketplace for business crime defence work, what steps must firms take to distinguish themselves from the competition?

Robbert de Bree: The elements most crucial in making a firm stand out in this area of the law remain an excellent knowledge and mastering of the law, paired with vast experience in the courtroom. Yet that is not sufficient. Other key elements for a firm to be a market leader include an ability to recruit the best lawyers; dedication to the clientele and a discreet approach; the use of modern technology (including large-scale forensic tools); academic leadership; and involvement in landmark cases.

As many of the clients facing business crime challenges simply want the best and most effective practitioners, they will look for well-established and well-reputed firms. By taking into account the elements mentioned above, firms can maintain and build these reputations.

Kenan Furlong: Firms that embrace technology will thrive. We have just used artificial intelligence (AI) to identify responsive documents to a court order made against our client in a criminal investigation. The order required the collection of 10.1 million documents. We negotiated the use of AI with the regulator to find the responsive documents within that 10.1 million. This process ultimately resulted in only approximately 130,000 of the 10.1 million documents being manually reviewed. It yielded very significant time and cost savings for both the client and the regulator, and also produced accurate results.

Saverio Lembo: Responsiveness, precision, identification of weaknesses, creativity in the choice of strategy and timing: these are the keywords for efficient defence work.

Matthew Reinhard: Lawyers need to establish a real connection with clients and be agile in responding to client demands and business realities. There are a lot of very good lawyers offering business crime defence services; in this marketplace you differentiate yourself by truly working to understand your client’s business and understand how your role as an investigations lawyer impacts business realties. Bursting into operations like a bull in a china shop to conduct an investigation ensures you will not be hired a second time. In my experience, clients appreciate a lawyer who takes the time to understand their business and design an investigation that, while thorough and thoughtful, respects the business realities on the ground. A lawyer that knows his or her client’s business, maintains good relationships and credibility with the enforcement agencies, and is willing to hop on an airplane at a moment’s notice is one who is retained again and again.


In your opinion, how do you think regulators’ priorities in your jurisdiction and globally are likely to develop over the coming years?

Robbert de Bree: Leaving the unknowns aside (which are obviously numerous for future developments) some examples of future developments can be predicted.

The focus in business crime on individuals will most likely not dwindle. It appears to be a general concept within enforcement agencies that singling out individuals is a very effective tool for future prevention. This tendency will have consequences for the approach taken by corporations in the manner they deal with investigations, being potentially less protective in respect of employees then they used to be.

Another tendency that will probably continue is enforcement agencies being more flexible with the aim of effectiveness in approaching cases: taking some cases to court, settling others, putting emphasis on alternative enforcement measures such as compliance monitoring, replacement of board members, etc.

Enforcement agencies will also continue to engage interested parties, stakeholders and other agencies in their fight against crime. Examples thereof are the rise of whistle-blower and leniency programmes; the targeting of auditors and banks for assistance and notifications of potential fraud and corruption; and the intensified cooperation with regulators in the fields of auditing, the financial system and competition. In the latter category of cooperation with other agencies, obviously the rise of international cooperation, including with criminal enforcement agencies, should also be stressed.

Kenan Furlong: Combatting money laundering is currently a key focus of the Irish regulators and will remain so. PwC’s recent Global Economic Crime and Fraud Survey showed that 54% of respondents involved in money movement had experienced an AML regulatory enforcement or inspection in the past two years. This trend certainly resonates with our own practice and looks set to continue. The FATF report mentioned above is also likely to keep AML high on the relevant Irish regulators’ agenda.

The Irish Law Reform Commission published an Issues Paper in 2016, which called for submissions on the reform of Ireland’s laws regarding white-collar crime. The Central Bank of Ireland (CBI) published its response in January this year. The CBI’s recommendations are indicative of the Irish regulators’ priorities in this area and are largely consistent with recent changes in the UK. These recommendations include:

  • creating a dedicated division within an existing criminal agency to investigate white-collar crime;
  • a new criminal offence for senior management of financial institutions whose reckless decisions cause the institution’s failure;
  • strengthening the accountability of senior personnel in financial companies by introducing reforms modelled on the UK regime; and
  • embedding certain non-sector specific core common standards within a legislative framework.

Saverio Lembo: The transnational investigation trend described above will continue to increase and we lawyers must be ready to take up this challenge.

Matthew Reinhard: Despite what political leaders may say on television and Twitter, the enforcement authorities “in the trenches” will continue to cooperate and collaborate in corporate investigations and prosecutions across international borders. Resolutions will be increasingly negotiated on multilateral terms. The development that will be interesting to watch as these cross-border prosecutions continue, particularly with regards to the US, the UK and the EU, is how individual nations’ principles of attorney-client privilege and double jeopardy/non bis in idem develop. Right now there is a substantial gulf across many of these jurisdictions in their application of these principles. At some point, I believe these principles will become more harmonised across nations that regularly cooperate on cross-border investigations, or the ability to continue successfully conducting such investigations and prosecutions may be hampered.

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