Self-Reporting: A New Weapon In Playbook Of Internal Investigations And Sanctions Compliance By Companies

Earlier this month, the United Kingdom and India announced that they had concluded negotiations for a free trade agreement to boost economic ties between the two countries.By this agreement, the two countries aim at doubling the bilateral trade in goods and services by 2030. This agreement, reportedly, will provide enhanced market access for a wide range of Indian goods and services in the UK and similarly British firms will enjoy benefits in the Indian market.Companies entering trade would be well advised to keep in mind the sensitivities of dealing with the United Kingdom and its companies. Compliance with the applicable laws including the UK Bribery Act is critical. It is important to remember that the UK Bribery Act has extraterritorial application and to that end, even an entity doing business in India may find itself falling foul of the said law..On April 24, the Serious Fraud Office published an external guidance on corporate cooperation and enforcement in relation to corporate crimes. The guidance encourages companies to self-report suspected criminal activity.This, among others, would include Indian companies operating in the UK and UK Companies having subsidiaries in India. This guidance outlines key considerations when deciding whether or not to charge a corporate or invite it to enter into a Deferred Prosecution Agreement negotiation.In such cases, the aspect of self-reporting is a fork in the road that many companies often find themselves at. To make it an easier decision, the guidance provides that in cases where a company self-reports promptly; and also cooperates fully with the SFO; such company will be invited to negotiate a DPA, unless exceptional circumstances apply.The SFO considers self-reporting of suspected corporate criminal conduct to be the mark of a responsible organisation. The reporting needs to be timely and is considered a sign of mitigation. The guidance also provides that responsible corporates may consider it necessary to investigate suspicious conduct before self-reporting in order to understand the nature and extent of such offending behaviour.It is not necessary that such investigation be fully investigated prior to self-reporting. Interestingly, the guidance provides that where a corporate has not self-reported, SFO will have regard to whether it was aware of the offending behaviour before their investigation began (presuming there is one in the first place).Interestingly, the guidance provides that where a corporate maintains a valid claim of legal professional privilege over relevant materials, it will not be penalised for doing so. Cooperation during the course of an investigation would mean providing assistance to the SFO that goes above and beyond what the law requires. The guidance also provides examples of non-exhaustive lists of cooperative conduct that a corporate can take..The Fed Should Prepare Markets For The Unexpected.Furthermore, the UK government has published the outcome of its review into the implementation and enforcement of UK sanctions. Companies faced with the decision of whether to voluntarily self-report sanctions breaches to law enforcement or sanctions enforcement agencies in the UK and the US can take some measure of comfort from recent comments made by the heads of UK Office of Foreign Sanctions Implementation and US Department of the Treasury’s Office of Foreign Assets Control.According to those remarks, companies acting in good faith that self-report minor and unintentional sanctions breaches are unlikely to face enforcement action. This comes at a key time when the UK and the US are attempting to harmonise their respective sanctions regimes, including applicable prohibitions and compliance guidance..India's Legal Market Reforms: Facilitating Entry Of Foreign Law Firms.It is important to keep in mind that this guidance does not state that where a company does not self-report, they will not be invited to enter a DPA. In an international world of business with borders fast diluting, it is natural that many conglomerates seek to exploit differences between international law, enforcement agencies or legal systems.To that end, forum shopping by a corporate would be considered as uncooperative conduct by the SFO. A corporate seeking to overload the SFO’s investigation by providing unnecessarily large amounts of material, which may hinder the effectiveness of the investigation, would also be considered uncooperative. The nature and extent of an organisation’s cooperation with the SFO will thus form an important factor to take into consideration by the SFO..Death By Thousand Cuts: How India's Insolvency Regime Fails MSMEs.The updated guidance stipulates that it is crucial to rapidly and efficiently investigate allegations in most instances. Companies should take enhanced measures such as:Training employees to spot and report signs of bribery and wrongdoing.Reacting swiftly to any tip-offs or whistleblower reports, ensuring evidence is gathered properly and considering the rights of all parties involved.Allocating proper resources for investigations, including external counsel, technology, and translation services, while preserving privilege where possible.Ensuring senior management is committed to eliminating bribery by promoting a culture where it is never acceptable.Reinforcing thorough due diligence, especially when engaging agents in high-risk areas..India’s Car Economy Leaves The Middle Class Fuming.An analysis of the guidance points to the fact that how an investigation is planned and contoured will be critical for how it is perceived if self-reporting takes place. We often find situations where companies undertake investigations as a check-the-box item rather than in its correct spirit. This approach is likely to change over a period.The SFO's guidance applies to UK-based companies operating globally, including those with subsidiaries or operations in India. It will also apply to Indian companies having their operations in the UK, in certain circumstances.With trade between the two countries, set to hopefully explode over the next decade and more, Indian companies doing business in the UK and UK companies doing business in India would be well advised to conduct a diligence exercise and ensure that they are ready for such kind of sensitivities and further, inculcate appropriate training and culture..Sara Sundaram and Sahil Kanuga are partners of Cyril Amarchand Mangaldas.Disclaimer: The views expressed here are those of the authors and do not necessarily represent the views of NDTV Profit or its editorial team..Who 'Paints' A Better Picture? | Open Interest

Self-Reporting: A New Weapon In Playbook Of Internal Investigations And Sanctions Compliance By Companies

Companies entering trade would be well advised to keep in mind the sensitivities of dealing with the United Kingdom and its companies.

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