The National Crime Agency (NCA) replaced the Serious Organised Crime Agency (SOCA) on 7 October 2013 as the UK's main body for tackling organised crime.
It has made a commitment to work closely with businesses in its fight against white-collar crime and cyber-attacks.
The most important tool in disrupting crime is information, which historically has come from intelligence on known or suspected criminal activity via reports, surveillance or research.
In the last few years the landscape has changed by obliging persons within the regulated sector and nominated officers to make disclosures of suspicions of money laundering, and requiring all persons to make disclosures about suspected criminal property or terrorist financing.
However, the NCA is adopting a new approach in combating crime by acquiring enormous amounts of innocuous looking information which were not targeted in the early stages of investigations by SOCA. This includes company records, regulated sector memberships or transport manifests, for example, that when combined with known or suspected criminal activity will help lead to the identification by the NCA of further criminality.
The effect will be a huge increase in the volume and type of information sought by the NCA from businesses under cover of a 'Request for Information' brought about by Section 7 of the Crime and Courts Act 2013.
On the face of it the law appears to support and encourage disclosure to the NCA. It provides a pseudo-protective blanket, giving any person or organisation lawful authority to disclose information to the NCA provided it is for the purposes of gathering, storing, processing, analysing, and disseminating information that is relevant to combating crime or serious crime.
This means a disclosure of information to the NCA in those circumstances will not breach any statutory or other obligation of confidence owed by the person making the disclosure. For example, the banks or a supplier may report suspected criminal activity relating to a bank account to the NCA without breaching their duty of confidentiality owed to their customer.
Whilst all this seems perfectly sensible there are some incredibly important points for companies to bear in mind:
- Last year saw litigation by a person subject of suspicious activity reports (SARs) to SOCA who wanted disclosure of the bank's internal reports and SARs together startlingly with the identities of all the staff involved in making them.
Do not underestimate the significance of this point. The NCA investigates serious organised crime committed by ruthless and dangerous individuals. In any proceedings linked to an NCA investigation there is always the potential for information obtained by a disclosure request to be disclosed. It should be edited to prevent identifying details being revealed but mistakes and negligence occur and the ramifications may be catastrophic.
The lesson to be learned is that it is vitally important that firms have in place good procedures which are followed when dealing with disclosure to the NCA and which properly but succinctly record details that led to or supported the disclosure, and which make the removal of identifying marks or information by the NCA fool proof in the event disclosure is ordered by the courts.
- It may be necessary in cases where there may be a risk of civil liability to inform insurers and it is also plausible that as a result of the NCA disclosure request you do not wish to continue to carry on a relationship with the person of interest to the authorities.
However, a person must not make an onward disclosure of information they have obtained from the NCA without the permission of the Director General of the NCA. The penalty is up to two years imprisonment. A business must ensure that any permission sought from the NCA is precisely worded to ensure that, if granted, it adequately protects any person making disclosure and avoids the potential for embarrassing litigation if a business relationship is terminated.
- Disclosure of information to the NCA may give rise to the tricky situation where in hindsight there was suspicion or reasonable grounds for recognising suspicious behaviour before the request from the NCA and uncertainty whether there was a legal obligation on the company or its individuals to report that suspicion earlier.
It is important that before information is provided to the NCA it is properly reviewed to avoid this pitfall as rarely will a firm or employee have done anything wrong. However, if it is not properly dealt with as part of the disclosure exercise a company might well be on the receiving end of an NCA investigation or restraint which may cause reputational and financial damage to a company which could well have been easily avoided.
Shoosmiths specialises in the area of financial and corporate regulation, and can advise in cases where you receive disclosure requests from the NCA, and in making Suspicious Activity or Transaction Reports. We also advise companies on putting in place appropriate documents, policies and procedures to avoid falling foul of the law.