Cross-Border White Collar Crime and Investigations Review 2020
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Cross-Border White Collar Crime and Investigations Review 2020 allenovery.com
2 Cross-Border White Collar Crime and Investigations Review | 2020
In-house counsel advising on investigations and CONTENTS
financial crime risk at large, multinational Global predictions 3
companies have had to contend with a plethora
of developments over the past 18 months. Overview of recent
developments by jurisdiction 6
More countries are introducing or amending
– Australia 8
financial crime laws, new types of businesses are
being bought into the scope of existing laws, – Belgium 12
and there is a flow of guidance from enforcing – China 15
authorities. Some jurisdictions are reinvigorating – France 18
or introducing laws that make it more difficult – Germany 22
to transfer information across borders during – Netherlands 25
an investigation. Others are encouraging – South Africa 28
enforcement authorities to collaborate with other – United Arab Emirates 30
investigating authorities across borders.
– United Kingdom 33
– U.S. 38
The result has been a significant rise in the
volume, scale and complexity of financial crime
investigations. In parallel, expectations of
corporate behaviour before, during and after
investigation, have never been higher.
The Allen & Overy Cross-Border White Collar
Crime and Investigations Review analyses the
latest developments and trends, and highlights
the most significant among the current and
emerging issues that white collar crime and
investigations in-house counsel should prioritise
in the year ahead.
© Allen & Overy LLP 2020
3
Global predictions
We asked our global white collar crime team for their views on the main issues for
in-house investigations teams in 2020. Although the picture is not uniformly the
same across jurisdictions, there were some reoccurring themes.
Managing data during an investigation
We expect to see increased data protection enforcement, with large – check local laws to see whether there are any restrictions on
fines, as the data protection regimes in many jurisdictions begin to transferring personal data across borders; and
mature. Those involved with conducting internal investigations will
– keep up to date on how these laws are being enforced –
need to:
for example, the French Blocking Statute has been recently
– ensure protection of personal data, for example when reviewing reinvigorated, and China has introduced new laws which
employee devices and communications; effectively represent a blocking statute.
Data affects enforcement
The availability of data, and faster machine learning, will likely Financial services firms may, and indeed are being encouraged to1,
lead to greater enforcement as authorities can leverage data take advantage of machine learning for their own internal
analytics to uncover misconduct more easily. For example, compliance purposes, but they will need to communicate to
the planned overhaul of the UK’s suspicious activity reporting regulators what that machine learning is, and what systems and
regime is partly aimed at the authorities being able to use data controls are in place to manage the use of machine learning and
analytics to gather better financial crime intelligence from the its associated risks. Regulators may challenge firms to explain how,
mass of information reported. for example, they are managing potential bias. Often financial
crime compliance technology is outsourced to a third-party
provider, but the responsibility remains with the regulated firm.
Intermediaries remain a higher risk business relationship
The use of intermediaries remains a very high corruption risk. sponsorship. Companies must ensure that their policies and
Many enforcement actions in 2019 related to payments made to procedures around the use of such business partners are properly
third parties concealed as, for example, consultancy fees or implemented, and reviewed on a regular basis to reflect the
sponsorship or charitable donations, including sports team business as it evolves.
1. https://www.aoinvestigationsinsight.com/from-enabler-to-game-changer-fighting-financial-crime-with-technology/
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4 Cross-Border White Collar Crime and Investigations Review | 2020
Increased focus on culture and compliance
Recent enforcement suggests that just having policies and type bribery offences. How the policies and procedures are
procedures in place, even if externally certified, will not necessarily embedded in an organisation2 is critical to making them effective.
be adequate either to prevent financial crime in an organisation or We expect to see even more scrutiny by authorities on ‘tone from
to provide an ‘adequate procedures’ defence for a company faced the top’ and corporate culture in general3.
with prosecution under the increasingly popular ‘failure to prevent’
Keeping up with expectations on ‘cooperation’ with the authorities
Many developed regimes now encourage a company under Although companies are encouraged to cooperate during an
investigation to cooperate with the authorities in order to obtain investigation, we have seen concern in the U.S4. that cooperation
‘credit’ which can, in turn, mean a greater chance of avoiding that is too close means that an ‘internal investigation’ is effectively
a corporate conviction and help to secure a discounted fine. a quasi-criminal investigation by the State – ie that the company’s
Some authorities have provided guidance on exactly what is lawyers are effectively the agents of the enforcing authority.
expected. There is often a tension between an authority’s In-house counsel should ensure appropriate independence to
expectations of cooperation, and rules on legal professional preserve the integrity of an internal investigation, whilst at the
privilege in some countries. Some authorities are hardening their same time not jeopardising cooperation credit5.
stance on privilege. For example, some are demanding either
Corporate appetite for cooperation will depend on the perceived
third-party certification of privilege claims or exercising or
benefits. Corporate appetite for cooperation will depend on the
demanding more power to determine the applicability of legal
perceived benefits. In the UK, for example, concerns have been
privilege in particular cases. In-house counsel are advised to
raised that DPA penalty discounts applied so far for companies
consider carefully how to manage issues of privilege and
that have self-reported are not sufficiently differentiated from
cooperation, perhaps adopting a tiered approach with ‘crown
a company that was convicted (following a guilty plea – eg: see
jewel’ privilege claims (for example communications with external
Sweett Group) or a company that did not initially self-report but
lawyers) and other privilege claims which it may be less
which was subsequently offered a DPA based on exceptional
uncomfortable about waiving (for example, notes of interviews
cooperation during an SFO investigation (eg see Rolls Royce)6.
with some employees).
Calls for increased transparency of settlements
While companies and enforcement authorities may favour in the Netherlands the settlement regime is the subject of political
settlements, there have been calls in some countries for increased debate meaning that, at present, there is some doubt around
transparency and scrutiny of the settlements. The degree of whether there will be any new settlements.
scrutiny and transparency varies by jurisdiction. For example,
2. https://www.allenovery.com/en-gb/global/expertise/advanced_delivery/ao_consulting
3. https://www.allenovery.com/en-gb/global/news-and-insights/publications/culture-compliance-and-corporate-governance-in-the-new-decade
4. https://www.aoinvestigationsinsight.com/employee-interviews-in-internal-investigations/
5. https://www.aoinvestigationsinsight.com/employee-interviews-in-internal-investigations/
6. https://www.aoinvestigationsinsight.com/dpa-penalty-discount-for-self-reporting-change-recommended-by-house-of-lords-committee/
© Allen & Overy LLP 2020
5
Dual-track investigations
Many authorities have an avowed intent to pursue criminal pursues both civil and criminal lines of enquiry. This approach
prosecutions for money laundering failings in the financial services can present challenges for investigations lawyers, particularly in the
sector. Whilst administrative penalties are still the norm, we are treatment of individuals.
seeing in the UK ‘dual track’ investigations whereby a regulator
Anti-Money Laundering and Counter-Terrorism Finance laws expand scope
More types of companies and advisors are being brought within market participants (eg art dealers and freeport operators) and high
the scope of AML7 and CTF regulation as the law makers try value property letting agents (previously it was just estate agents)
to keep up with the money launderers and those who finance into scope. An expanded definition of ‘tax adviser’ means that
terrorism. For example the implementation of the EU’s 5th those who offer material aid or assistance on tax matters will also
Anti-money laundering directive in the UK has bought crypto fall in scope.
asset exchange providers, custodian wallet providers, high value art
Sectors under the spotlight
Whilst there is some enforcement in most business sectors, and legislative developments regarding access to customer data10,
there continues to be a higher level of enforcement worldwide, shows that they are clearly in the sights of some agencies.
and record breaking fines, against some of the perceived
In China, the life sciences sector also continues to attract the
‘facilitators’ of financial crime such as financial services firms,
attention of enforcement agencies.
in a number of areas including in particular AML8 and the
facilitation of tax evasion. Telecoms companies can also be caught Financial reporting and auditors11 are facing increasing scrutiny
in the crosshairs given their role as communications service following a number of high profile corporate collapses.
providers – recent fines relating to financial sanctions breaches9,
Increasing law and more global cooperation
Multinationals will be familiar with the financial crime laws in There have been instances of an authority ‘piggy backing’ on an
jurisdictions where they operate. As more countries amend their interview by another authority, outside of its own jurisdiction.
laws (for example, South Africa, Germany, UAE) it is important This should impact decisions made during an investigations
that compliance takes account of new requirements, in particular concerning interactions with authorities.
to understand the ‘strictest’ regime under which it operates which
There remain some challenges for companies dealing with multiple
may in turn help shape the compliance programme.
authorities. Laws in a number of countries (eg China, France) make
There is undoubtedly more collaboration between jurisdictions it difficult to cooperate with foreign regulators.
now. Any investigation that has touch points in more than one
Our lawyers are used to helping our clients navigate all these issues, if you
jurisdiction will likely involve the authorities talking behind the
need more information please contact amy.edwards@allenovery.com.
scenes at the investigation, charging and settlement stages.
7. https://www.aoinvestigationsinsight.com/uk-aml-changes-in-force-today/
8. https://www.aoinvestigationsinsight.com/u-s-continues-aggressive-sanctions-and-anti-money-laundering-enforcement-against-non-u-s-banks/
9. https://www.aoinvestigationsinsight.com/international-tier-one-telecoms-carrier-fined-for-sanctions-breach/
10. https://www.allenovery.com/en-gb/global/news-and-insights/publications/growing-pressure-on-technology-companies-to-disclose-customer-data-quickly
11. https://www.aoinvestigationsinsight.com/financial-reporting-and-auditors-under-the-spotlight-in-australia/
allenovery.com
6 Cross-Border White Collar Crime and Investigations Review | 2020
Overview of recent
developments by jurisdiction
AUSTRALIA CHINA GERMANY
Substantial increases in funding for 2019 was an active year for white collar The diesel emissions scandal and the
government investigative agencies, and major enforcement in China on all fronts. so-called cum/ex trades have unleashed
reforms of the corporate criminal and The consolidation of enforcement agencies unprecedented enforcement activity by
regulatory framework (with the promise of into one “super regulator”, plus the addition German criminal prosecution authorities
more to come), has increased the workload of of new agencies is likely to increase the scope against national and international companies.
in-house litigation teams. A greater willingness and pace of enforcement action. The life In their wake, the German legislator is
from regulators to use the full range of their sciences sector is a primary target, determined to expand the enforcement
enforcement toolkit is generating more criminal and regulatory enforcement against financial options available to sanction corporate crimes
and civil penalty investigations and court services has increased markedly. New laws with the introduction of a new Corporate
proceedings. While the financial sector has provide for more significant fines for market Sanctions Act, the draft of which is currently
been the immediate focus and will remain manipulation and commercial bribery coordinated within the Federal Government.
so in the short term, recent reforms have offences. Moreover, the International Criminal This Act will also impact how internal
radically changed the compliance landscape, Justice Assistance Law, along with the investigations with a German nexus are
and boards of all companies are under Cybersecurity Law and State Secrets Law, conducted. In the current enforcement
unprecedented pressure to manage conduct pose challenges to how multinational environment, investigations into tax evasion,
risk effectively. companies conduct internal investigations, money laundering and insider trading are
and potentially share information with foreign high on the agenda of German criminal
BELGIUM regulators in their home countries. prosecution authorities.
The Belgian legal landscape of criminal law
FRANCE NETHERLANDS
and criminal procedure has changed over the
past years and is bound to be amended even The criminal enforcement landscape has Legal entities can be prosecuted for criminal
more substantially with a view to improving clearly changed in France over the course offences committed by their employees,
the efficiency of the judicial, investigative and of 2019, with unprecedented fines being including by their employees abroad. In the
prosecutorial functions. After several years imposed against UBS and a rise in the last couple of years, we have seen the Dutch
of uncertainty, the legal framework for criminal number of French-style deferred prosecution Anti-Money Laundering regime being
settlement is now set as a result of landmark agreements (Convention Judiciaire d’Intérêt strengthened and we expect this trend to
Supreme Court cases and subsequent Public). Money-laundering, tax evasion and continue. Out-of-court corporate settlements
legislative reforms. The prosecutorial policy corrupt practices have been a key focus, have been criticised for lack of transparency
is strongly in favour of settling financial and and are likely to remain so. The National and there has been a call for some form
economic criminal cases which effectively Financial Prosecutor’s Office changed of judicial review of these settlements.
translate as an increase in criminal hands towards the end of 2019, with its This discussion is still on-going, and has the
settlements. Cross-border co-operation director Eliane Houlette being replaced by attention of the Dutch government and
between judicial and regulatory authorities Jean-François Bohnert. In light of the latter’s Parliament. This has effectively put a freeze
is intense both at EU and global level. experience in Germany and with Eurojust, on new settlements until the issue is resolved.
Financial intermediaries continue to be cross-border cooperation is likely to increase A new child labour due diligence law will
a point of focus in fraud matters, in 2020. The revitalisation of the French increase corporate focus on supply chains.
especially in complex cross-border cases. Blocking Statute may make it more difficult for
a company to cooperate with a non-French
authority during an investigation.
© Allen & Overy LLP 20207
SOUTH AFRICA UNITED KINGDOM UNITED STATES
In the previous decade, South Africa has The UK has high ambitions to fight financial Mixed signals to companies came out of the
had low levels of prosecution for corruption, crime, but 2019 saw mixed success for U.S. last year. FCPA enforcement is at an
money laundering and other white-collar enforcement authorities. Whilst there were all-time high, and the DOJ Antitrust Division
offences. The end of the Jacob Zuma era, some successful prosecutions of individuals, continues to coordinate across borders,
the establishment by President Cyril and some decision making by the Serious while the DOJ National Security Division
Ramaphosa of a new Investigating Directorate Fraud Office (SFO) on legacy cases, there enforces U.S. sanctions on non-U.S.
at the National Prosecuting Authority and were some high-profile failures of SFO companies without notable cross-border
three recent Presidential Commissions of corruption prosecutions against individuals cooperation. The DOJ Criminal and Antitrust
Enquiry into corruption herald a new era in where their employers had already entered Divisions are giving companies more incentive
South African enforcement efforts. Coupled into deferred prosecution agreements (DPAs) than ever to beef up compliance efforts and
with anticipated changes in South Africa’s key and paid huge fines, for the same alleged cooperate with government investigations,
anti-bribery and corruption law, corporates are conduct. The Office of Financial Sanctions while a U.S. court has signalled that such
expected to face increased scrutiny by Implementation saw its first three sanctions cooperation may infringe on individuals’
regulators in 2020 after years of inaction. fines – but at quite low levels. Looking ahead, rights. Companies should invest in robust
in the year of the Bribery Act’s 10th birthday, compliance, prioritize early disclosure of
UNITED ARAB EMIRATES there was a significant start for the SFO potential problems to U.S. authorities,
with the ground breaking multi-jurisdictional and know that the long arm of U.S. sanctions
The UAE is at the forefront of a trend across DPA with Airbus. Both the SFO and the can and will follow them across increasingly
the Gulf region to crack down on financial Financial Conduct Authority (FCA) have attenuated connections to the U.S.
crime. Recent legislative changes introduced stated their intention to make greater use of
in the UAE have strengthened the powers and money-laundering related offences. We await
resources available to enforcement authorities. the outcome of an appeal of KBR v SFO
These changes have extended the scope and on the UK authorities’ ability to order a
territorial reach of the anti-bribery law, company to produce documents from
increased penalties for private companies overseas parent companies.
involved in criminal activities, and allowed
authorities to seize the proceeds of crime.
allenovery.com8 Cross-Border White Collar Crime and Investigations Review | 2020
Australia
Substantial increases in funding for government investigative agencies, and major
reforms of the corporate criminal and regulatory framework (with the promise of
more to come), has increased the workload of in-house litigation teams. A greater
willingness from regulators to use the full range of their enforcement toolkit is
generating more criminal and civil penalty investigations and court proceedings.
While the financial sector has been the immediate focus and will remain so in the short
term, recent reforms have radically changed the compliance landscape, and boards of
all companies are under unprecedented pressure to manage conduct risk effectively.
Investigations trends/developments
Australia saw a significant increase in enforcement activity in 2019, Regulators now have a larger array of enforcement tools available
particularly from the regulators of financial services entities and to them. There have been reforms to Australia’s regime for
institutions. This arose in part from recommendations made punishing corporate criminal offences and civil penalty
following a government inquiry (The Royal Commission into contraventions (discussed in more detail below) as well as the
Misconduct in the Banking, Superannuation and Financial Services Banking Executive Accountability Regime (BEAR) that
Industry) (FS Royal Commission). In response, the Australian commenced in full on 1 July 2019 and imposes a range of
Securities and Investments Commission (ASIC) adopted a new accountability obligations on banks and their senior executives.
enforcement approach, resulting in more cases being pursued
In its 2019 enforcement priorities, Australia’s competition
through the courts, rather than by way of settlements or
regulator, the Australian Competition and Consumer Commission
enforceable undertakings (the latter down to 20 in the most recent
(ACCC), placed an increased focus on cartel conduct and other
financial year, from 57 in the prior year).
anti-competitive practices that involve “Australians, Australian
Separately, following years of quiet and moderate achievement, business or entities carrying on business in Australia”. It has
the Australian money laundering regulator (AUSTRAC) brought several cartel actions in recent years, including a high-
successfully brought its first major actions1 under Australian profile criminal cartel case against two global investment banks,
anti-money laundering regulations resulting in large fines, with one of Australia’s largest domestic banks and six of their senior
several further actions announced in 2019. executives. The ACCC also strengthened its cartel immunity and
co-operation policy2, which came into effect on 1 October 2019.
Significant law reforms impacting corporate criminal liability
There were significant changes to the Australian enforcement – a substantial increase in the potential fines or civil penalties
framework in 2019 and a raft of proposed further reforms were against corporates (from AUD1million to a maximum of
announced. Australia’s corporate liability regime was the subject 10% of a company’s annual turnover);
of far-reaching reform:
– enhancing the remedies available under the civil penalty regime
– an increase in potential imprisonment terms for breach of through expanding the number of obligations punishable by civil
criminal offences; penalty, as well as increased availability of infringement notices
and the creation of relinquishment (or disgorgement) orders;
1. https://www.allenovery.com/en-gb/global/news-and-insights/publications/austrac-v-tab-limited-a-review-of-the-first-judicial-analysis-of-key-provisions-in-the-amlctf-act
2. https://www.accc.gov.au/publications/accc-immunity-cooperation-policy-for-cartel-conduct-october-2019
© Allen & Overy LLP 20209
– a simplification of the definition of “dishonesty” to a single-limb, requirements, some of which are not present in other comparable
objective test as to whether the conduct is “dishonest according legislation (eg, the UK Modern Slavery Act 2015) that may be
to the standards of ordinary people”, bringing the legislative applicable to corporates caught by this legislation.
test in line with the common law in Australia and the UK
In terms of proposed reforms:
(see, in relation to the UK, “Re-defining criminal dishonesty:
why does it matter?”)3. – perhaps most significantly, the Government has reintroduced the
“Combatting Corporate Crime Bill”5, which proposes to create
Australia’s whistleblower regime was also substantially revised 4
an offence for “failing to prevent bribery” (in a similar form to
to broaden the range of people who can make a protected
that contained in the UK Bribery Act 2010) and establish
disclosure, the conduct in respect of which a protected disclosure
a deferred prosecution agreement regime;
can be made, and the remedies available to whistleblowers that
suffer detriment as a result of having made a protected disclosure. – amendments to Australia’s anti-money laundering legislation6
have also been introduced into Parliament to simplify and clarify
Australian entities (and foreign entities carrying on business in
provisions relating to customer due diligence, correspondent
Australia) with annual consolidated revenue of AUD100m now
banking and tipping off; and
need to submit and publish a Modern Slavery Statement in respect
of their business, as a result of changes made effective on 1 January – the Australian Law Reform Commission has authored
2019. The legislation imposes a number of mandatory content a discussion paper on proposed reforms to how liability is
attributed to corporations and their senior executives7.
Internal investigations – key developments
Whistleblower reforms will likely result in an increase in the Regulators (including the Australian Taxation Office) have stepped
number of internal investigations commenced by whistleblower up their challenges to claims of privilege by corporates. In March
reports, particularly for entities that were not previously required 2019, ASIC settled proceedings against a financial institution and
to have a whistleblower policy in place. The penalties for breaching a large Australian law firm seeking to compel them to produce
the confidentiality of an eligible whistleblower, or causing/ interview notes taken as part of the law firm’s independent
threatening detriment to such a person, has substantially increased investigation into the conduct of employees at the institution.
to a maximum of the greater of: (i) AUD10.5m; or (ii) 10% of the This followed a high-profile dispute aired during the FS Royal
company’s annual turnover. Commission about whether the final report by the law firm should
be regarded as “independent”, given the level of input from
Greater pressure on regulators to focus on “deterrence, public
management and the board of the financial institution on the law
denunciation and punishment” has resulted in an increasing
firm’s drafts of the report. There have also been reports that ASIC
reliance on public enforcement through court action.
has recently issued a number of compulsory examination notices
Several recent court actions have been the result of investigations
to General Counsel, whose knowledge of relevant matters is likely
arising out of self-reporting by corporates. While financial services
to have arisen from requests for legal advice.
institutions are subject to a range of breach reporting obligations
that will guide the timing of self-reporting, the practice of
regulators picking “the low-hanging fruit” to bolster their
reputations may make other corporates wary of self-reporting
before they have a clear understanding of the conduct of their
employees and the potential contraventions and liability.
3. https://www.allenovery.com/en-gb/global/news-and-insights/publications/re-defining-criminal-dishonesty-why-does-it-matter
4. https://www.allenovery.com/en-gb/global/news-and-insights/news/specific-companies-operating-in-australia-will-need-mandatory-whistleblowing-policy
5. https://www.allenovery.com/en-gb/global/news-and-insights/publications/australia-proposes-robust-new-foreign-bribery-laws
6. https://www.allenovery.com/en-gb/global/news-and-insights/publications/phase-1-5-in-australias-anti-money-laundering
7. https://www.aoinvestigationsinsight.com/australia-looks-to-simplify-and-broaden-its-approach-on-corporate-and-executive-criminal-responsibility/#page=1
allenovery.com10 Cross-Border White Collar Crime and Investigations Review | 2020
Sectors targeted by law reforms or enforcement action
Australia’s financial services sector was the primary focus of 2020. The report contained a number of findings of misconduct
enforcement action in 2019. The public pressure on that sector (dishonest and otherwise) in the industry, and exhorted regulators
was prompted by the FS Royal Commission, which released its to take a more aggressive approach (see Key Themes in the
final report in February 2019, however several reforms and Interim Report)8. ASIC, APRA and the Commonwealth Director
amendments were already in train prior to it. The Federal of Public Prosecutions have all taken action in response to the
Government pledged to introduce legislation in relation to all the misconduct identified.
recommendations of the FS Royal Commission by the end of
Cross-border co-ordinated enforcement activity
The Australian authorities collaborate with their overseas ASIC continues to bring civil penalty proceedings against
counterparts. The Australian Federal Police (AFP) has been Rio Tinto Ltd (the world’s second largest mining company)
a member of the International Foreign Bribery Taskforce since and former senior individuals for alleged breaches of accounting
2013 and worked on several matters with its other members standards and disclosure obligations. The proceedings,
(including the UK National Crime Agency and the U.S. Federal commenced in 2018, arose from a similar enforcement action
Bureau of Investigations (FBI)), a number of which are ongoing. taken by the U.S. Securities and Exchange Commission (SEC)
In November 2018, an investigation by the AFP into foreign and the UK Financial Conduct Authority (FCA) in 2017.
bribery by a subsidiary of the Reserve Bank of Australia concluded In announcing the enforcement action, each of these regulators
with several guilty pleas. That investigation involved the referred to the support provided by the others in collecting and
co-operation of the UK Serious Fraud Office (SFO), the Malaysian sharing evidence.
Anti-Corruption Commission and Attorney-General’s Chambers,
Throughout 2019, we have seen increased willingness from
and the Indonesian National Police. More recently, the AFP has
ASIC to issue letters of request to Singapore and Hong Kong
been assisting the SFO with its investigation into Unaoil.
financial regulators to obtain documents and conduct witness
AUSTRAC recently announced several actions against entities interviews, which is probably connected with ASIC joining the
and individuals connected with child exploitation offences in the Enhanced Multilateral Memorandum of Understanding
Philippines. This has included the prosecution of individuals with (EMMoU) in June 2018. Overseen by the International
the cooperation of the AFP and Philippine authorities Organization of Securities Commissions, the EMMoU provides
(AUSTRAC’s media release here)9. It has also involved proceedings that its signatories (which include the Singaporean and Hong Kong
against Westpac, one of Australia’s largest domestic banks, securities regulators) will provide the “Fullest Assistance
for numerous money laundering compliance failures at the bank, Permissible” to each other’s investigations.
including for money transfers to the Philippines.
Financial crime issue predictions for 2020
Responding to greater enforcement activity and improved increase in concurrent regulatory investigations (where the
enforcement powers of regulators is a principal challenge for conduct falls within overlapping regulatory ambits). As a result,
corporates operating in Australia at present. Regulators have the Australian legal and compliance market is experiencing a
received major additional funding to undertake this enforcement considerable skills shortage, making it even more difficult to staff
activity. In April 2019, it was announced that ASIC would be the increased workload.
receiving a AUD405m increase, and APRA would receive a
Further, pressure on boards to adequately monitor non-financial
AUD152m increase, increases in their annual budgets of 25%
risks, as well as the recent imposition of several new obligations
and 30%, respectively. The increased funding has led to greater
that are broadly-worded or principles-based (such as BEAR),
co-operation and co-ordination between regulators, as well as an
has necessitated the development of more mature compliance
8. https://www.allenovery.com/en-gb/global/news-and-insights/publications/australian-royal-commission-into-misconduct-in-the-banking-superannuation-and-financial-services-ind
9. https://www.austrac.gov.au/about-us/media-release/man-accused-travelling-philippines-abuse-children
© Allen & Overy LLP 202011
systems. This has led to an increase in change projects designed address conduct risk and compliance processes. Such systems
to identify and manage such risks, and a greater investment in can be critical for meeting the regulatory obligations of large
consultants with expertise in regulatory compliance, as well as institutions, however breakdowns in those systems or related
corporate culture and governance. General Counsel will need to be processes can lead to large-scale data breaches or systemic
particularly focused on the use of IT systems and infrastructure to non-compliance with the regulations they were intended to meet.
Recent legal directory quotes
“Allen & Overy LLP is engaged for a broad array
of compliance and investigation work with core
“Jason Gray is commended for his strengths in anti-bribery and corruption, economic
ability to advise on anti-bribery sanctions and anti-money laundering, regulatory
and corruption matters throughout support and transaction due diligence. Key partners
the Asia-Pacific region, and is are based in Sydney though the practice is active
especially highlighted for his throughout the Asia Pacific region. The practice
expertise in U.S. FCPA matters. also regularly handles matters with elements in the
Clients say: “He is U.S.-qualified, U.S., UK and other jurisdictions with Jason Gray
which is fantastic. He knows the recently acting for a U.S.-based consumer goods
U.S. regulations very well and company on two bribery-related investigations in
can leverage that well on matters India and another in Russia. Gray heads the
in the Middle East and Asia, anti-bribery and corruption, white collar crime
leading a lot of investigations in and government enforcement practices while Jason
Asia-Pacific and Europe.’” Denisenko oversees regulatory financial services
Chambers 2020, Anti-Bribery and Corruption.
matters; John Samaha serves as practice head of the
litigation and contentious regulatory departments.”
The Legal 500 2020, Regulatory Compliance & Investigations
KEY TEAM MEMBERS
Jason Gray Michael Shepherd John Samaha Jason Denisenko
Partner – Sydney Partner – Sydney Consultant – Sydney Partner – Sydney
Tel +612 9373 7674 Tel +61 2 9373 7643 Tel +612 9373 7676 Tel +612 9373 7809
jason.gray@allenovery.com michael.shepherd@allenovery.com john.samaha@allenovery.com jason.denisenko@allenovery.com
Edward Einfeld Jessica Ji
Senior Associate – Sydney Senior Associate – Sydney
Tel +61 2 9373 7753 Tel +612 9373 7576
edward.einfeld@allenovery.com jessica.ji@allenovery.com
allenovery.com12 Cross-Border White Collar Crime and Investigations Review | 2020
Belgium
The Belgian legal landscape of criminal law and criminal procedure has changed over
the past years and is bound to be amended even more substantially with a view to
improving the efficiency of the judicial, investigative and prosecutorial functions.
After several years of uncertainty, the legal framework for criminal settlement is now
set as a result of landmark Supreme Court cases and subsequent legislative reforms.
The prosecutorial policy is strongly in favour of settling financial and economic
criminal cases which effectively translate as an increase in criminal settlements.
Cross-border co-operation between judicial and regulatory authorities is intense
both at EU and global level. Financial intermediaries continue to be a point of focus
in fraud matters, especially in complex cross-border cases.
Investigations trends/developments
We have seen an increase in enforcement action for (i) corruption; Criminal Code on criminal settlements. Criminal settlements
(ii) terrorism; (iii) cyber criminality; (iv) human trafficking; can be entered into by entities and individuals. BCPG guidelines
and (v) economic and financial crime, including tax fraud. (2018) state that a criminal settlement should be considered by
These are all ‘priority subjects’ identified by The Belgian College prosecutors for certain offences listed in the guidelines, including
of Prosecutors General (BCPG), whose mission includes setting economic, financial, tax and labour offences.
Belgian criminal policy.
The largest settlement ever reached with Belgian authorities was
The use of alternative resolution mechanisms for criminal matters finalised in September 2019 in a cross-border tax fraud matter
has continued to rise, following recent amendments to the involving a Swiss bank, for EUR300 million.
Significant law reforms impacting corporate criminal liability
There have been several amendments to criminal law and criminal criminal liability has also been reformed and expanded, in that
procedure rules aimed at improving the efficiency of the judicial, individuals and corporate entities may now be prosecuted jointly
investigative and prosecutorial functions. Among these legislative for engaging in the same criminal conduct (this was possible only
reforms, the law on criminal settlements and the law on the to a limited extent previously). Further structural changes are
confiscation and seizure of criminal assets were amended following expected and a bill proposing a new Criminal Code a just been
several landmark Constitutional Court cases. The law on corporate introduced in Parliament.
Internal investigations – key developments
There is no regulatory or statutory framework dealing with internal the investigation. The materials produced in the process of an
investigations under Belgian law. Corporates are free to conduct investigation can be seized by the authorities in the context of
internal investigations in parallel with criminal or regulatory a search. However, they can be protected by legal privilege if they
investigations without any positive duty to disclose the results of have been produced and sent by a solicitor.
© Allen & Overy LLP 202013
Sectors targeted by law reforms or enforcement action
Because of the opacity of money flows in complex cases, traceable assets; the entities which make transactions possible
Belgian prosecutors tend to focus more intensely on financial are generally well-established companies that are easier to
intermediaries when investigating and prosecuting fraud matters. prosecute. Charges against these companies are often based
While it is often difficult for them to arrest the actual fraudsters, on aiding and abetting.
who may be abroad, act through the internet or have no
Cross-border co-ordinated enforcement activity
There is increased cross-border co-operation in criminal There is an increasing propensity for Belgian prosecutors to resort
investigations (eg mutual assistance, appointment of joint task to criminal seizure and confiscation, especially in complex
forces on specific cases) and also in regulatory investigations cross-border cases involving money laundering and corruption.
(eg investigations conducted by tax authorities). Recent amendments to the law have broadened the possibilities
of criminal confiscation and seizure under Belgian law and have
We are also seeing an increase in cases that are initiated and
entirely reformed the functioning and powers of the Belgian Asset
investigated at EU level by the European Anti-fraud Office
Recovery Office.
(OLAF) and then subsequently submitted to authorities of
Member States for prosecution. We expect that this trend will
continue to develop as the European Public Prosecutor’s Office
becomes operational.
allenovery.com14 Cross-Border White Collar Crime and Investigations Review | 2020
Financial crime issue predictions for 2020
The following issues will stay high up on the agenda for 2020:
detecting and preventing corrupt practices, data protection
breaches and cyber security attacks, money laundering and
sanctions/embargoes.
Recent legal directory quotes
Allen & Overy LLP’s group has been
handling cases of money laundering, tax fraud,
embezzlement, and cybercrime, among other
areas. Regulatory investigations and compliance
matters are additional core strengths. Nanyi Kaluma is noted for
Legal 500 2019 her expertise in cross-border
money laundering and
bribery investigations.
Joost Everaert was rated Legal 500 2019
as Leading Individual
and Nanyi Kaluma as
Next Generation Lawyer.
Legal 500 2019
KEY TEAM MEMBERS
Joost Everaert Nanyi Kaluma Thomas Declerck Camille Leroy
Partner – Brussels Counsel – Brussels Senior Associate – Brussels Associate – Brussels
Tel +32 2 780 26 06 Tel +32 2 780 26 38 Tel +32 2 780 2483 Tel +32 2 780 2493
joost.everaert@allenovery.com nanyi.kaluma@allenovery.com thomas.declerck@allenovery.com camille.leroy@allenovery.com
Basil Saen Mathilde Vandormael
Trainee – Brussels Trainee – Brussels
Tel +32 2 780 2523 Tel +32 2 780 2522
basil.saen@allenovery.com mathilde.vandormael@allenovery.com
© Allen & Overy LLP 202015
China
2019 was an active year for white collar enforcement in China on all fronts.
The consolidation of enforcement agencies into one “super regulator”, plus the
addition of new agencies is likely to increase the scope and pace of enforcement
action. The life sciences sector is a primary target, and regulatory enforcement against
financial services has increased markedly. New laws provide for more significant fines
for market manipulation and commercial bribery offences. Moreover, the International
Criminal Justice Assistance Law, along with the Cybersecurity Law and State Secrets
Law, pose challenges to how multinational companies conduct internal investigations,
and potentially share information with foreign regulators in their home countries.
Investigations trends/developments
Consolidation of enforcement authorities: For the past several Increased enforcement against financial institutions – market
years, China’s enforcement of criminal and administrative laws offences and AML: The continuing development and opening of
has been rigorous, and 2019 is no different. The reorganization China’s financial market has driven a move towards regulation that
of key regulators in China is likely to increase the pace and scope is more in line with international standards. Financial regulators in
of enforcement actions. The creation of a “super-regulator”, China have stepped up their enforcement action. Two areas are of
the Administration for Market Regulation (SAMR), which now particular interest to international financial institutions.
assumes the responsibilities of all antitrust enforcement, product
– Securities market misconduct: More international financial
quality supervision and food and drug administration in addition
institutions are participating in China’s capital markets either
to the functions of the industrial and commercial administration,
through their onshore presence or cross-border utilising regimes
is intended to bring greater cooperation among multiple
such as QFII/RQFII and Stock Connect. The securities
enforcement agencies that previously operated independently,
regulator, the China Securities Regulatory Commission (CSRC),
and greater consistency for those subject to enforcement actions.
has continued its enforcement focus on market manipulation,
New regulator bares its teeth in life sciences and healthcare sector: one of its three key enforcement areas (the other two being
The Supervision Law of the People’s Republic of China misrepresentation of information and insider dealing).
(Supervision Law), effective March 2018, creates a new regulator, The number of market manipulation enforcement cases has
the National Supervisory Committee, exercising power over a increased significantly:
broadly defined group of “public officials.” The Supervisory
– Between 2010 to 2014, there were on average four market
Committee can investigate public officials’ conduct such as
manipulation enforcement cases per year.
bribery, abuse of power, dereliction of duty, improper transfer
of benefits, nepotism, and waste of state assets. It has wasted – Between 2015 and the third quarter of 2019, the average
little time in initiating a broad range of investigations. In 2019, rose to 21.
the Supervisory Committee launched a wave of investigations,
Fines are also getting tougher. Before 1 March 2020,
focused on the life sciences industry, reviewing the conduct of
an institution could be fined up to five times its illegal income
hospitals, public medical associations, and healthcare providers.
for market manipulation, and an individual could be fined
Although multinational companies are not the target of these
up to RMB0.6m. The new Securities Law of the People’s
investigations, they are often pulled into investigations related
Republic of China provides that an institution can be fined up
to their dealings with these public bodies. The findings of the
to ten times its illegal income, and an individual can be fined
Supervisory Committee can be referred to other regulators to
up to RMB5 million.
take additional action.
allenovery.com16 Cross-Border White Collar Crime and Investigations Review | 2020
– AML: The AML regime has been extended from its focus on against third party payment institutions. The highest penalty in
traditional banking financial institutions in 2007 (when China 2019 was RMB6.3m. On 14 February 2020, PBOC issued three
joined the Financial Action Task Force), to insurance companies penalty decisions with penalties in each of the decisions
and securities firms after 2007, and with a stronger focus on exceeding RMB10m.
payment institutions in 2012. The People’s Bank of China
The “conversion rate” from administrative liability to criminal
(PBOC), the main regulator for AML enforcement,
liability in these areas, however, remains fairly low. From 2010 to
has significantly stepped up enforcement efforts. In 2019,
the third quarter of 2019, CSRC issued 130 administrative penalty
the majority of administrative penalty cases enforced by PBOC
decisions on market manipulation, whereas there are only
were AML related. There were 468 AML enforcement cases in
13 criminal convictions for market manipulation in the same
2019, an increase from 396 in 2018. The total fines increased
period. For AML, PBOC issued 468 administrative penalty
from RMB13.1m to RMB17.3m. Of the AML enforcement
decisions in 2019, while there are only 53 criminal convictions
cases against institutions, more than 80% also imposed liability
for AML in the same year.
on individuals. Six of the top ten highest penalties were issued
Internal investigations – significant developments
As noted above, the ICJA Law could potentially have a substantial associated with breach. New guidelines were issued in 2018 and
impact on how internal investigations are conducted in China. 2019, although they still leave large grey areas. The potential
impact of the Cyber Security Law on cross-border investigations
In addition, there are laws that influence how data can be handled,
is significant, particularly on the handling and cross-border
particularly with respect to the transfer of data outside the People’s
transmission of “personal information”.
Republic of China. For years, the State Secrets Law of the People’s
Republic of China has posed concerns about how information that The Cyber Security Law, coupled with the State Secrets Law, has
may fall within the definition of “state secrets” is transmitted the potential to act essentially as a blocking statute to prevent the
outside of China. transmission of data (including the results of investigations)
outside the People’s Republic of China, with expanded penalties
The 2016 Cyber Security Law of the People’s Republic of China
if provided to a foreign government authority.
(the Cyber Security Law) has also generated debate in light of the
vagueness of the legislation coupled with the significant penalties
Sectors targeted by enforcement action
The life science industry has been a primary focus of enforcement
activity in China, and 2019 is no exception. In 2019, 48% of the
published administrative penalties relating to bribery concerned
the life sciences industry, followed by the technology,
entertainment, and logistics sectors.
© Allen & Overy LLP 202017
Cross-border enforcement activity
A step towards collaboration: China has not traditionally investigations and evidence collection, arrangements for witnesses
co-operated well with other global enforcement agencies, to testify or assist in investigations, sealing, seizure, and freezing of
although there are developments that suggest it is taking small property, confiscation and return of illegal gains and other relevant
steps towards greater international engagement in this area. property, and transfer of sentenced persons. The law provides that
no foreign authority, organization, or individual may carry out
Given that many international financial institutions use their
activities in China, in relation to foreign criminal proceedings,
Hong Kong presence to gain access to China’s securities market,
nor provide a foreign country with evidentiary materials or the
financial regulators such as the CSRC have increasingly
assistance prescribed in the ICJA Law without the approval of the
co-operated with their counterparts in the Hong Kong Securities
competent Chinese authorities.
and Futures Commission (SFC), including asking the latter to
pass on requests for the production of documents and conduct The ICJA Law has the potential to substantially change the
interviews for CSRC investigations. process of conducting investigations in China. While it is not
entirely clear how the law will be interpreted and enforced, on its
But significant obstacles remain: In October 2018, a new law
face, the law may well pose a challenge for a company wishing
introduced rules and procedures on international criminal justice
to conduct an internal investigation and self-report the results to
assistance between China and other countries (the Law of the
a foreign authority.
People’s Republic of China on International Criminal Justice
Assistance (ICJA Law)). It covers service of documents,
Financial crime issue predictions for 2020
2020 is likely to present a host of challenges to multinational to globalisation, and China comes under increasing scrutiny
companies doing business in China. We anticipate significant around the world, the potential of countervailing scrutiny
legislative developments and enforcement activities in relation over the operations of multinational companies in China is also
to cyber security and data privacy offences, as well as continued likely to increase. Clients would be well-advised to keep a close
enforcement of the country’s anti-bribery laws and financial eye on legal developments, and prepare themselves for what could
market regulation laws. As the world becomes increasingly hostile be a rocky ride.
KEY TEAM MEMBERS
Eugene Chen Jane Jiang Yihan Zang
Registered Foreign Lawyer, Partner – Shanghai Senior Associate – Shanghai
CAL – Hong Kong SAR Tel +86 21 2036 7018 Tel +86 21 2036 7142
Tel +852 2974 7248 jane.jiang@allenovery.com yihan.zang@allenovery.com
eugene.chen@allenovery.com
allenovery.com18 Cross-Border White Collar Crime and Investigations Review | 2020
France
The criminal enforcement landscape has clearly changed in France over the course
of 2019, with unprecedented fines being imposed against UBS and a rise in the
number of French-style DPAs (Convention Judiciaire d’Intérêt Public). Money-laundering,
tax evasion and corrupt practices have been a key focus, and are likely to remain so.
The National Financial Prosecutor’s Office changed hands towards the end of 2019,
with its director Eliane Houlette being replaced by Jean-François Bohnert. In light
of the latter’s experience in Germany and with Eurojust, cross-border cooperation
is likely to increase in 2020. The revitalisation of the French Blocking Statute may
make it more difficult for a company to cooperate with a non-French authority
during an investigation.
Investigations trends/developments
Of the 513 ongoing cases at the National Financial Prosecutor’s In February 2019, French judges ordered a large Swiss bank to pay
Office (the PNF) in January 2019, 47% related to corrupt a record EUR3.7 billion fine for illicit banking solicitation and
practices (eg corruption, influence peddling, favouritism, aggravated money-laundering of the proceeds of tax evasion.
misappropriation of public funds). 45% was linked to damage This is the largest fine incurred in French history and represents
to public finances (tax evasion, VAT fraud and the laundering of a major shift in approach. Although it has been appealed,
the proceeds of these offences) and 8% concerned market abuse the ruling is viewed as a benchmark for future similar cases,
(insider dealing, price manipulation, dissemination of false and may encourage other entities to reach a settlement instead of
information). Read more1. facing a trial at all costs.
Settlements by corporates are already becoming more common.
Since the Sapin II law entered into force in late 2016, French
authorities have entered into ten French-style deferred prosecution
agreement (known as CJIPs – Convention Judiciaire d’Intérêt Public)
with entities accused of corruption, tax evasion or laundering the
proceeds of tax evasion. They have resulted in the payment of
significant fines, particularly by banks (eg, EUR300m for HSBC
Corrupt practices 47%
Private Bank Suisse SA, EUR250m for Société Générale SA,
Damage to public finances 45% EUR3m for Bank of China) although Airbus SE recently broke
Concerned market abuse 8% the record by paying a fine of more than EUR2b to the French
treasury as part of its co-ordinated settlement2 of investigations led
by the French PNF, the U.S. Department of Justice and the UK
Serious Fraud Office into alleged corrupt practices.
1. https://www.tribunal-de-paris.justice.fr/75/going-proceedings
2. https://www.agence-francaise-anticorruption.gouv.fr/files/files/CJIP%20AIRBUS_English%20version.pdf
© Allen & Overy LLP 202019
Significant law reforms impacting corporate criminal liability
Enforcement risk for financial services regulatory breaches has appeared and could be notified to the regulator, with a maximum
increased as the limitation period has been extended from three to limitation period being capped at 12 years. This means that the
six years by French Statute No. 2019-486 dated 22 May 2019 on limitation period applicable to market abuse is the same,
business growth and transformation (known as the “PACTE” law). irrespective of whether such abuse is enforced by the AMF
Time begins to run on the day of infringement, or if the breach or the PNF.
has been hidden or concealed, on the day on which the breach
Internal investigations – key developments
The PNF and the Anti-corruption Agency (the AFA) issued joint In its recently published guidelines, the Paris Bar Council
guidelines in June 2019, setting out their expectations for internal addressed issues that may arise relating to the status and role of
investigations in the context of a CJIP. The guidelines highlight the a lawyer while conducting an internal investigation.3 It reminds
degree of co-operation with prosecution authorities as a key factor lawyers that they are required to defend the interests of their
taken into account when deciding whether to offer a CJIP. clients and to do so in a manner compliant with the applicable
Prosecutors expect a company to proactively reveal wrongdoing, statutory and professional conduct rules.4
establish the facts and identify failures in systems and controls.
AFA-PNF guidelines on privilege are controversial. They make it
The guidelines make clear that if a company conducts its own clear that if an entity refuses to provide documents on the basis of
internal investigation, before the authorities become involved, privilege, the PNF will decide if this refusal appears justified under
it must ensure the preservation of evidence. An internal French privilege rules. An unjustified (in the PNF’s view) refusal
investigation conducted in parallel with a criminal investigation will reduce a company’s co-operation credit. The PNF expressly
must be conducted in coordination with criminal authorities. states that it expects investigation reports and interview notes,
In both cases, the internal investigation must result in a report, as well as any relevant documents and documents relied upon in
which must include precise and accurate reporting of the facts, interview, to be made available. The guidelines are the subject of
and must be provided to prosecutors. discussion within the Paris Bar Council, particularly as they relate
to privilege, and new Bar Council guidelines for lawyers instructed
to conduct internal investigations are expected soon.
Sectors targeted by law reforms or enforcement action
The increasing level of fines and penalties incurred by banks and distribution of electrical products, solutions and related services.
financial services corporates illustrates that the French financial The company and all individuals were acquitted. A second action
and banking industry has been particularly targeted by concerns a French multinational company which specialises in the
enforcement authorities. production and processing of industrial minerals.
It is perhaps too early to tell if any particular sectors are being According to the AFA’s 2018 Annual Report published in June
targeted in the anti-corruption sphere. The first decision to be 2019, the AFA conducted 47 inspections in 2018; four were
issued under Sapin II concerned a French group specialising in the conducted in execution of monitorships set out in CJIPs and 43
3. http://www.avocatparis.org/mon-metier-davocat/publications-du-conseil/nouvelle-annexe-xxiv-vademecum-de-lavocat-charge-dune
4. http://www.altanalaw.com/wp-content/uploads/2018/03/Internal-Investigation-Conducted-by-Lawyers-Compliance-LexsNexis-GOO-2018.pdf
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