No-deal Brexit will hamper SFO’s crime-fighting ability

18 Sep 2019 12:44 pm by Annie Robertson

The UK’s ability to stamp out serious economic crime looks set to suffer a heavy blow in a no-deal Brexit, as Britain's top white-collar crime agency grapples with questions of resourcing and future relationships with foreign counterparts.

The Serious Fraud Office is likely to find it tougher to investigate and prosecute crime, if new mechanisms aren’t put in place before the UK leaves the EU. And with the Brexit deadline of Oct. 31 fast approaching, any such action is caught in a tight timeframe.

Lisa Osofsky, director of the SFO, is optimistic about how the agency will weather the uncertain future. But it faces almost certain setbacks and higher expenditure if its ability to exchange information with EU law-enforcement agencies is temporarily blocked.

Osofsky discussed these challenges with MLex, describing how the fraud agency continues to depend on relationships with overseas enforcers even in the blitz of Brexit.

“It’s difficult for me to envisage that the same enforcement bodies we’ve been working with for years would change their stance,” she said in an interview.

That said, the SFO’s latest annual report warns of "a loss of access to EU measures and tools arising from the UK’s exit from the EU leading to an adverse effect on investigations and prosecutions”.

It’s a theme that’s cropped up across the Brexit negotiations. While the parties have spoken of high aspirations to maintain a close relationship in the future, this only counts for so much if the EU toolkit that makes tight cooperation on a day-to-day basis isn’t available.

With the deadline for withdrawal from the EU fast approaching, UK organizations are facing a tight timeframe. And in a no-deal scenario in particular, the UK will be left scrambling to replicate extradition and information exchange.

European framework

Osofsky — a former US Department of Justice prosecutor — remains hopeful of the agency’s ability to work with its overseas counterparts in the months to come.

“We have worked and continue to work closely and cooperatively with different countries … We have a fairly limited number of cases, so to that degree, we can anticipate any changes and are able to take an operational approach to plan for circumstances after Brexit,” Osofsky said.

Under the current framework, the SFO relies on a network of EU information exchanges in its spearheading of cross border investigations and to supplement existing multijurisdictional cases.

The UK is also part of the European Arrest Warrant network, which allows the SFO to speedily extradite criminal suspects to and from other EU member states to face prosecution.

In 2017 and 2018, more than 1,400 people were arrested under the special arrest warrant, and 180 were returned to the UK. In October, for instance, the SFO extradited former Deutsche Bank trader Andreas Hauschild from Italy to face charges of market manipulation.

Maintaining the EAW membership was one of former UK prime minister Theresa May’s primary objectives in the Brexit talks. As a former interior minister, May placed as much emphasis on the post-Brexit security relationship as on economic ties, and she warned lives would be put at risk by an overly legalistic approach.

The EAW offers a degree of automaticity in the immediate arrest and repatriation of wanted criminals that's found nowhere else in the world. It relies on the oversight of the EU Court of Justice and EU Commission, and on common trust between member states’ judicial systems.

The bloc ruled out extending this to the UK as a nonmember state, arguing it would lack the institutional oversight to be able to trust the UK.

But in the framework for the UK’s post-Brexit relationship, it promised to establish “effective arrangements based on streamlined procedures and time limits enabling the UK and member states to surrender suspected and convicted persons efficiently and expeditiously.”

It called more broadly for cooperation in data exchange and anti-money-laundering work, on the condition the UK adhered to data-protection and personal rights.

But in a no-deal exit, these arrangements will fall away. The UK and EU will instead be reliant on the 1957 Council of Europe Extradition Convention. In a November 2018 paper, the UK described this process as longer, more complex and more difficult, noting that EU member states would not directly recognize nor action judicial orders.

The paper also noted that under the convention it took French prosecutors 10 years to successfully extradite terrorist suspects from the UK.

Extra expenditure

Osofsky earlier this year warned UK lawmakers that a no-deal Brexit would have a negative impact on the country’s ability to fight crime at a time when cross border crime and security threats are increasing.

“I do not have a crystal ball, [but] figuring out what is there will have a resource strain … It is going to take time, manpower, womanpower and money to figure it all out,” Osofsky told the Parliamentary Committee in January.

Osofsky then further acknowledged that increasing the speed of the SFO’s caseload post-Brexit would be unlikely without a clear framework already in place: “I can try to establish good relationships and try to make things work as smoothly as possible, [but] I realize that there are some things I do not have control over.”

“All of our cases are international, so that means I have to go to some very unusual jurisdictions to get evidence. Sometimes it takes a long time. I cannot really control that," she added.

The SFO announced in January that that it would recruit an additional six staff members to bolster the case teams for the impact of Brexit — at an estimated cost of 271,600 pounds ($338,000 today) in the first year. It has also carved out a new "chief intelligence officer" role to help the agency to source new cases.

“We always want to ask whether we are spending money and resources on the right things. I want to encourage our teams to focus and help them work as efficiently and effectively as possible,” Osofsky told MLex.

However, she has previously acknowledged the challenge the SFO faces in achieving its goal to increase the speed of its caseload in the absence of a clear framework afforded to EU member states.

The absence of contingency planning has also caused alarm at the Law Society of England and Wales, which in March warned that “a significant gap in our ability to fight crime” exposes the UK to severe vulnerability.

Osofsky, however, is upbeat about the prospects for the agency, telling MLex she is "pleased about how well we’re working with our colleagues around the world.”

“Our cooperation with other law-enforcement agencies is working incredibly well in a way that makes me excited about the future," she said.

What happens next

UK authorities may be able to sign bilateral agreements with other European bodies after Brexit, but the immediate fallout from losing access to law-enforcement databases — including Europol — is likely to cause significant disruption to the SFO.

For instance, the UK will lose access to the EU’s Criminal Records Information System, which allows member states to exchange information about criminal convictions. It currently takes six days on average to retrieve information within the EU, compared with an outside-EU average of 66 days.

This would cause “an abrupt shock to UK policing and pose a risk to the safety of the public,” the House of Lords warned as early as December 2016.

It may also result in further damage to the SFO’s regularly battered reputation as UK’s top crime-fighting agency.

Another database the SFO will lose access to is the Schengen Information System, a law-enforcement watchlist that flags up when a passport goes into a reader at an EU border. It was accessed more than 539 million times by the UK in 2017.

Since Osofsky joined the SFO as director in August 2018, she has been forthright about her desire to re-examine its current expenditure on investigations and prosecutions.

“We have to assess if there is a realistic prospect a jury will convict and ask if it is in the public interest to convict before we go to the expense and effort of putting that person in the dock,” Osofsky told MLex.

If the SFO sees a fallback in evidence shared by international law-enforcement agencies in the wake of Brexit, that could present it with some tough decisions on whether to prosecute certain cases.

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