SFO’s transparent approach to Deferred Prosecution Agreements

• United Kingdom

• Financial services disputes and investigations
• Fraud and financial crime
• Litigation and dispute management

30-10-2020

On 23 October 2020, the UK Serious Fraud Office (“SFO”) published guidance from its updated internal Operational Handbook providing insight into the SFO’s approach to the use and negotiation of Deferred Prosecution Agreements (“DPAs”). The SFO guidance can be found here.

DPAs are an alternative disposal to prosecution for corporate offenders who have been suspected of committing certain economic crimes, such as conspiracy to defraud, money laundering, fraud, bribery, and failure to prevent facilitation of foreign tax evasion offences.

DPAs have been common for more than a decade in the United States, but were only recently introduced in the UK in February 2014 through Schedule 17 of the Crime and Courts Act 2013.

Whilst the Crown Prosecution Service and the SFO are both able to enter into a DPA, only the SFO has so far used this new tool, having agreed nine to date.

SFO director Lisa Osofsky said: “Over the past six years, we at the SFO have been developing our approach to negotiating and entering into DPAs, and in turn, establishing best practice. Publishing this guidance will provide further transparency on what we expect from companies looking to cooperate with us.”

The current guidance offers few surprises and generally serves as a helpfully comprehensive restatement of the position already set out in relevant legislation and other guidance relating to DPAs set out across multiple sources, including the Crime and Courts Act 2013, the Code of Practice for DPAs, the SFO Corporate Co-Operation guidance and the SFO Compliance guidance.

What does this mean for you?

It is important to note that the guidance is part of the SFO’s internal Operational Handbook which is created as guidance for SFO lawyers and investigators, but published on their website for transparency. It provides valuable insight into what SFO case controllers will take into account when considering if a case is suitable for a DPA, and how they will then approach the DPA process.

A key point stemming from the guidance is the confirmation that companies do not need to self-report immediately once potential wrong doing becomes known, but should do so “within a reasonable time of wrongdoing coming to light”. This is a helpful re-iteration of a point which was often missed from the Code of Practice, which will serve to alleviate some of the pressure felt by companies in the past to make a quick report

before it was even clear that criminal offences had been committed.

When potential wrongdoing comes to light in a business, the company should ensure that the matter is promptly and appropriately investigated, to adequately understand the nature and extent of the wrongdoing to be able to discern the potential liability for the company.

It is important that the investigation team are skilled and experienced and that all necessary steps are taken to ensure that the investigation is protected by legal professional privilege where possible to avoid problems arising further down the line. This is particularly important since the guidance also reiterates that internal investigation reports and notes of investigative interview can be used by the SFO in evidence against the company.

Further guidance will always be welcome as the SFO’s DPA practice and experience continues to evolve in the future, but in the interim this detailed guidance demonstrates the SFO’s commitment to the use of DPAs, and serves as a comprehensive explanation of the SFO’s approach to DPAs and the DPA process.

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