Companies and directors need to be extra-vigilant for any potential fraud indicators in their organisation in view of new Serious Fraud Office guidance. Those who self-report wrong-doing will now be less likely to face prosecution for corporate offences, but the risks of failing to report could be more serious.
The SFO’s underlying message is: talk to us, and you could avoid prosecution.
The SFO investigates and prosecutes serious or complex fraud, bribery and corruption. Its fining powers are robust: on conviction, unlimited financial penalties can be imposed on companies; and individuals face up to 10 years in prison.
Self-reporting
But the SFO is encouraging companies self-report and cooperate with the SFO – not only to help them avoid prosecution but because it is vital to its intelligence gathering and investigations.
The SFO makes clear in its guidance that self-reporting suspected fraud or other criminal conduct is a mark of a responsible organisation. And if it needs to take action following any investigation, it is likely go easier on the company if it has promptly self-reported and cooperated.
You can report direct to the SFO via a secure reporting portal to its intelligence division. The SFO says it will respond within 48 business hours and decide whether to open an investigation within six months.
Those that self-report will be invited to negotiate a deferred prosecution (but it is important to note that it is not guaranteed no prosecution will take place). A failure to self-report wrongdoing within a reasonable time will be considered a specific public interest factor in favour of prosecution.
No mandatory time limit is imposed, and what will amount to a ‘reasonable time’ will depend on the specific case. Helpfully, the SFO says companies should not wait to fully investigate their suspicions before reporting it.
Cooperation
Companies who fail to self-report risk prosecution and penalties including substantial fines and confiscation orders. SFO director Nick Ephgrave has warned that you take a “gamble” if you know of wrongdoing and keep it to yourself.
However the guidance provides a measure of reassurance for directors who are, perhaps, less proactive: if you have not self-reported, it is still possible to avoid prosecution if the company has provided investigators with genuine and “exemplary cooperation”.
Reassuringly, the guidance clarifies that it is only in exceptional cases that a prompt self-report and full co-operation will lead to prosecution rather than an invitation to negotiate a DPA.
Companies can demonstrate genuine cooperation by, for instance, ensuring digital and hard copy material is preserved, providing the facts on suspected criminality, and identifying relevant third-party material as well as all individuals involved (within and outside the organisation).
The SFO guidance can be found here.
What’s next?
On a related note, 1 September 2025 will see the ‘failure to prevent fraud’ offence come into effect (s199 Economic Crime and Corporate Transparency Act 2023). Businesses will be expected to implement anti-fraud measures to prevent corporate fraud – and if they don’t, they risk prosecution.
The SFO is also working towards incentivising whistleblowers in the near future.
How can we help?
If you have any concerns, you should take expert advice on your responsibilities. Contact Clare Lang by emailing clare.lang@mfgsolicitors.com or calling us on 01562 820181.
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