White-collar crime and compliance predictions for 2022

03 February 2022. Published by Sam Tate, Partner

In a blink of an eye, we are moving into a new spring with a new set of challenges and opportunities facing businesses.

Here are RPC's three white-collar crime and compliance predictions for 2022…

1. Reform of corporate criminal liability – expansion of failure to prevent

Although initially scheduled to be released at the end of 2021, the Law Commission's option paper, setting out its suggestions on how the law relating to corporate criminal liability might be reformed, is now set to be released early this year. 

The tone of the Law Commission seems to have shifted from its conclusion in 2010 that there was no general reform necessary; at the time they argued for specific provisions to be created in criminal offences. However, twelve years following the Law Commission's 2010 conclusion, there has been a near constant call for these offences to be expanded and in 2020, Lisa Osofsky, Director of the Serious Fraud Office (SFO), stated an extension of the 'failure to prevent' offences was at the top of her wish list. 

We predict that the Law Commission will recommend a significant expansion of failure to prevent offences and compliance programs (which are the only corporate defence to these crimes) will once again be thrown into focus across larger corporates.

2. NFTs and money laundering – come under FCA scrutiny

Non-fungible tokens (NFTs) have now established themselves as an increasingly popular alternative asset class for investors, yet the financial crime risks associated with this innovative technology are arguably higher than other common alternative investments such as wine, art and classic cars.  This is because there is no physical asset to move and there is a decentralised currency as a central part of any transaction. Given recent news that money laundering involving cryptocurrency is estimated to have increased by 30% in 2021, NFTs need to be carefully considered for money-laundering and fraud risk.

It is not that these concerns went unnoticed entirely in 2021, the Advertising Standards Agency has displayed a proactive approach to the marketing of NFTs, calling it a 'red alert' priority issue.  The Treasury's consultation in 2020 on regulating the cryptoasset industry also focused on promotions and communications. However, we expect the FCA to assert their jurisdiction over NFTs – specifically in relation to fraud and money-laundering and create new guidance or rules accordingly. 

3. DOJ/SFO investigations – significantly increase

In 2021 the United States 'Strategy on Countering Corruption' outlined a government-wide approach to tackling corruption. The strategy included key areas such as improving international intelligence collection, engaging partner countries in detecting and disrupting foreign bribery and encouraging the corporate compliance programs. 

At the sharp end of this strategy, the DOJ warned late last year of an impending crackdown on companies with one focus being those companies which have violated the terms of their deferred prosecution agreements and another being companies which were failing to invest in their compliance systems. We predict more investigations focused in these areas and more investigations generally across the globe.  We expect this to extend to the SFO, not only because of the stronger relations created with the US by the current director, but also the amount of fraud during COVID19 and impending UK insolvencies revealing financial crime issues to the public and press.  

For more information, or to discuss any of these takeaways further, please do not hesitate to contact us or visit our corporate crime page to find out how the team can help.

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