GT London Law Blog

GT London Law Blog

Legal Advisers for a Changing World

Money Grows on Trees for Local Council Pursuing Home Improvement Enthusiasts and Local Football Club Fundraiser

By Anne-Marie Ottaway, Barry Vitou and Gareth R. Hall on Posted in criminal law, GT Alert, Proceeds of Crime Act, White collar

It is widely thought that proceedings under the Proceeds of ‘Crime’ Act, such as confiscation, are intended to obtain the money someone makes from committing a crime. So, the thinking goes, if a person is convicted of fraud having made £100,000 from the crime, then those funds can be confiscated by the courts.

While this basic premise is correct, UK money laundering laws are far broader in their application and are increasingly being used by UK authorities in innovative ways. Real estate matters in particular are receiving attention from UK local authorities.

For example, one innovative local authority has appointed surveyors to determine the increase in property value following illegal tree pruning and felling. The result, in addition to relatively nominal fines, is that courts have imposed significant – and some would argue punitive – confiscation orders.

Case 1 – The Ole Oak Tree…

The first case involves a 42-foot oak tree covered by a Tree Preservation Order (TPO) located in the back-garden of a Mr Samuel Wilson’s home in Canford Cliffs, Dorset.

A TPO is an order made by a local authority to protect trees and woodland. A person who contravenes a TPO is guilty of a criminal offence, and if found guilty, can expect to pay a fine of up to £20,000.

In 2016, Mr Wilson decided to cut a number of branches off the oak, which was casting a shadow over a Juliet balcony he had recently added to his £1 million home. After his neighbour contacted the local authority, Mr Wilson was prosecuted for cutting branches from the tree in violation of the TPO. He pleaded guilty to causing willful damage to a protected tree and was fined £1,200.

Following conviction, Poole Borough Council pursued Mr Wilson in confiscation proceedings. The council’s valuation experts said cutting the tree’s branches increased Mr Wilson’s home value by £21,000.

Three years after the original conviction, Mr Wilson was ordered to pay £15,000 in legal costs plus the £21,000 additional home value under UK money laundering confiscation provisions.

Activity     Pruning of one oak tree
Fine       £1,200
Costs   £15,000
Confiscation    £21,000
TOTAL COST £37,200 (plus one criminal conviction)

Click here to read the full GT Alert, which includes additional cases of confiscation orders under the Proceeds of Crime Act.

UK Financial Conduct Authority Anti-Money Laundering Investigations Underway With Threats of Civil and Criminal Enforcement

By Anne-Marie Ottaway, Barry Vitou and Gareth R. Hall on Posted in GT Alert, White collar

Speaking on 4 April 2019, the head of enforcement for the UK FCA, Mark Steward, warned those subject to the UK’s anti-money laundering regulations that ‘it is time that the FCA gave effect to the full intention of the Money-Laundering Regulations which provides for criminal prosecutions’. He added: ‘[The FCA is] now conducting ‘dual track’ AML investigations, i.e., investigations into suspected breaches of the Money-Laundering Regulations that might give rise to either criminal or civil proceedings’.

Mr Steward was referring to The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (Regulations) which came into force 26 June 2017, implementing the EU’s fourth directive on money laundering and replacing the previous, less prescriptive 2007 regulations.

To read the full GT Alert, click here.

Quick Update: Brexit Date Extended to 31 October 2019

By Gillian Sproul on Posted in Brexit, GT Alert

In the early hours of 11 April 2019, Brexit date was extended again, this time to 31 October 2019.

The original Brexit date was 29 March, two years from the date on which the UK gave the EU notice of its intention to leave the EU. Then on 22 March, the EU and UK agreed to extend the date to 12 April. The withdrawal terms agreed in draft between the EU and UK in November 2018 had been rejected by the UK Parliament on three successive occasions. The purpose of the extension was to give the UK time to develop alternative withdrawal plans for consideration by the EU before the new date.

To read the full GT Alert, click here.

For more on Brexit, click here.

29 March 2019: Brexit Day Update

By Gillian Sproul and Simon Harms on Posted in Brexit

Today, 29 March 2019, was planned to be Brexit day: the UK would leave the EU at 23:00 GMT. That plan has had to be abandoned and Brexit day postponed to 12 April 2019. It may be pushed back even further.

How did the UK end up here?

The UK’s EU withdrawal terms, agreed in draft between the EU and UK in November 2018, were rejected by the UK Parliament – not once, but twice, in January and February. There would clearly not have been enough time to try for a third time before Brexit day, so last week UK Prime Minister Theresa May negotiated further timings with the EU. The EU agreed that if the draft withdrawal terms were approved by the UK Parliament when put to a vote for the third time, Brexit day would change to 22 May. If, on the other hand, the terms were rejected again, there would be an extension to 12 April, and UK would have to present an alternative plan to the EU for consideration before that date.

To read the full alert, click here.

For more on Brexit, click here.

Nike Fined €12.5 Million for Restricting Intra-EEA Sales

By Gillian Sproul and Addiped Cheng on Posted in Antitrust Trade & Regulation

In a warning shot to businesses using intellectual property rights to restrict cross-border sales within the European Economic Area (EEA), on 25 March 2019 the European Commission fined Nike €12.5 million for banning traders of licenced football merchandise from selling to other EEA countries. The decision underscores the Commission’s commitment to eliminating commercial practices that threaten the integrity of the internal market to the detriment of consumers.

To read the full alert, click here.

To read more about antitrust issues, click here.

FCA Receives Thousands of Insider Dealing Tip-Offs From Financial Services Firms; Few Investigations Opened

By Anne-Marie Ottaway, Barry Vitou and Gareth R. Hall on Posted in insider dealing, White collar

Figures provided by the UK’s Financial Conduct Authority (FCA) show that in spite of the thousands of tip-offs on insider dealing it receives from banks and other financial services firms, it rarely opens an investigation.

In a response to a freedom of information (FOI) request made by Greenberg Traurig’s White Collar Defence and Special Investigations Practice, the FCA confirmed that as of 4 March 2019 it had opened 61 investigations into insider dealing since 1 April 2018.

To read the full GT Alert, click here.

For more on white collar defense & special investigations, click here.

Brexit & REACH: Potential Changes to UK Chemical Regulation

By Aonghus Heatley on Posted in Brexit, chemical regulation, Corporate, Environment, Environmental, EU Withdrawal Agreement, Government, International Law, International Trade, No-deal Brexit

29 March 2019, the date currently fixed in United Kingdom (UK) and European Union (EU) law as when the UK will leave the EU, is now just two weeks away. At this late stage, the terms of the UK’s withdrawal from the EU remain unsettled. The Withdrawal Agreement agreed in draft with the EU at the end of 2018 (see GT Alert Brexit Brinkmanship) has now been twice rejected by the UK Parliament.

A “no-deal” Brexit would mean an abrupt end to the UK’s membership of the EU, with the immediate cessation of UK participation in various EU institutions and regimes, including the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regime.

EU REACH Continues Under the Withdrawal Agreement

Under the Withdrawal Agreement (were it to be eventually ratified), the post-Brexit regulatory framework in the UK would stay broadly the same for a transitional period.

Under the Withdrawal Agreement, the UK would continue to participate in REACH, and:

  • the process for registering new chemicals under REACH during the transitional period would remain the same;
  • the UK would recognise all new registrations, approvals, authorisations and classifications granted by the EU during the transitional period; and
  • registrations, approvals, authorisations, and classifications in place before the UK leaves the EU would continue to be valid during the transitional period.

This GT Alert discusses the new UK REACH under a “no-deal” Brexit and the obligations of non-UK businesses under UK REACH.

Click here to continue reading.

UK Review of the Bribery Act 2010 – Committee Concludes New Guidance Needed

By Anne-Marie Ottaway on Posted in Bribery Act 2010, Compliance Programs, Corporate, criminal law, Government, White collar

In 2018 the House of Lords announced it would set up an ad hoc Select Committee to conduct a post-legislative review of the Bribery Act 2010. Greenberg Traurig Shareholder Anne-Marie Ottaway was appointed Specialist Advisor to the Committee, which today published the report of its findings. The review confirms that the Bribery Act 2010 is “an exemplary piece of legislation” which sets the global benchmark for anti-bribery and corruption legislation.

The Bribery Act was passed, with much fanfare, in 2010 and came into force on 1 July 2011. The Act simplified previous anti-corruption legislation dating back to 1889 and 1906 and introduced for the first time a specific corporate offence of failure to prevent bribery.

Under the Act, the Ministry of Justice (MOJ) was required to publish guidance for businesses on the adequate procedures they would need to implement to have a defence to the failure to prevent offence. The Act applies to UK companies and foreign companies conducting business or part of a business in the UK. It pertains to conduct in both domestic and foreign jurisdictions and applies to bribery in both the public and private sectors.

Following the Act’s introduction, there was much concern about the impact it would have on the ability of UK businesses to conduct business abroad; this concern was a key focus of the Committee’s review, which covered the following:

  • Length of investigations
  • Police resources and training
  • Lack of cooperation and coordination
  • Revisions to the MOJ Guidance
  • Facilitation payments
  • The importance of a risk assessment
  • Corporate criminal liability
  • The adequate v reasonable debate
  • Deferred Prosecution Agreements (DPAs)
  • DPAs not a substitute for prosecuting culpable individuals
  • Scotland

Click here for the full GT Alert on the Select Committee’s findings.

LIBOR and “No-Deal” Brexit

By Thédoor Melchers and Lotte Kuhn˘ on Posted in Brexit

One of the consequences of a “no-deal” Brexit would be that the United Kingdom would no longer have access to the European financial market. This would affect LIBOR as a trusted and widely used benchmark.

LIBOR vs. EURIBOR

Currently, two relevant benchmarks exist in the European Union: LIBOR and EURIBOR. LIBOR stands for “London Interbank Offered Rate” and is a benchmark that is used for – among other things – loans based on Loan Market Association documentation. LIBOR is made available in five different currencies: U.S. dollar, British pound, Japanese yen, Swiss franc, and euro. EURIBOR stands for “Euro Interbank Offered Rate” and is, simply put, the interest rate at which European banks lend money to each other. EURIBOR is only available in euros. Both benchmarks are determined daily, but while LIBOR focuses on the London banking system, EURIBOR takes into account the entire European Union.

Developments around LIBOR

LIBOR has been the subject of increased scrutiny after it emerged that certain banks had manipulated LIBOR rates. Furthermore, insufficient activity in the unsecured interbank market raised questions about the sustainability of the LIBOR benchmark. Closely related to these developments is the new EU Benchmarks Regulation (EU) nr. 2016/11 and the development of a new secured overnight interest rate by the European Central Bank (ECB). The Benchmarks Regulation went into effect on 1 January 2018 and includes a two-year transitional period. The new interest rate for the euro will be based on data already available to the Eurosystem and is anticipated to be finalized before 2020.

The Future of LIBOR

Andrew Bailey, chief executive of the UK Financial Conduct Authority (FCA), has spoken to all current panel banks about agreeing voluntarily to sustain LIBOR until the end of 2021. However, a “no-deal” Brexit most likely will cause LIBOR to lose its authorized benchmark status in the European Union. This would leave nine months for the reference rate’s administrator to reapply as a third-country provider. Thus, even if LIBOR survives until 2020, a no-deal Brexit could come with enormous risks.

Takeaway

Market participants may wish to review and consider the amendment and waivers provision in loan agreements being concluded now, taking into account a possible “no-deal” Brexit and the development of the new overnight interest rate by the ECB. Furthermore, lenders should closely review the requirements posed by the Benchmarks Regulation to ensure they are compliant with its provisions.

To read more about Brexit, click here.

Questions about this information can be directed to:

˘ Not admitted to the practice of law

The Financial Conduct Authority – Part 2 – Criminal & Civil Insider Dealing

By Anne-Marie Ottaway, Barry Vitou and Gareth R. Hall on Posted in criminal law, FCA, Financial Conduct Authority, insider dealing, insider trading, White collar

In a February 2019 speech, the FCA’s Director of Market Oversight, Julia Hoggett, said the following:

The life blood of all well-functioning markets is the timely dissemination of information, without which effective price information cannot take place. The malignant form of that same life blood is the misuse or inappropriate dissemination of that information.

The ‘malignant form’ to which Ms Hoggett referred is insider dealing, where someone trades on the basis of information not known to the public in order to make a gain or avoid a loss, or where one discloses such information and/or encourages others to trade in relation to it.

Insider dealing and market manipulation were both key parts of Ms Hoggett’s speech, which is an important outline of what the FCA sees as the foremost issues for the firms it oversees. Ms Hoggett also referred to the FCA update to its ‘Financial Crime Guide’ for firms. A forthcoming GT Alert will address the updated guide and considerations for corporates flowing from insider dealing.

In this GT Advisory we focus on the definition of and defences to insider dealing in both the criminal and civil context, as well as the ways in which individuals in the UK have been pursued for such conduct.

To read the full GT Alert, click here.