A New Normal? White Collar Enforcement in the Post-Brexit Age

The UK and EU reached a Trade and Cooperation Agreement on 24 December 2020, just one week before the end of the implementation period which transitioned the UK from an EU member to a third country. The deal has important implications for cross-border cooperation in criminal matters in the UK and EU. In this OnPoint, we consider the changes to white collar and financial crime enforcement brought about by Brexit, and how the UK and EU will adapt to the ‘new normal’. 

Key Takeaways

• Orders and requests issued before 31 December 2020 remain enforceable. 
• Opportunities for the UK to participate in EU law enforcement agencies such as Europol and Eurojust have been significantly reduced.  
• European Arrest Warrants are no longer available to the UK. The replacement ‘surrender’ system, while more flexible than most extradition arrangements between countries, is more limited than the prior regime. 
• UK and EU member state authorities must now rely on mutual legal assistance agreements when sharing information or seeking investigative measures in another country, although the ability to form Joint Investigation Teams continues. 

Background

The UK formally left the EU at 11pm on 31 January 2020. However, EU regulatory and legal frameworks were rolled over, virtually unchanged, until the end of the implementation period on 31 December 2020. Two legal texts govern the relationship between the UK and the EU: 

• The Withdrawal Agreement
• The Trade and Cooperation Agreement

The Withdrawal Agreement

The Withdrawal Agreement¹ was signed on 24 January 2020 but remained largely silent on the subject of criminal justice cooperation after the end of the implementation period: these matters are dealt with in the Trade and Cooperation Agreement. 

The key provisions in the Withdrawal Agreement for the purposes of white collar and financial crime enforcement are contained in Title V on ‘Ongoing Police and Judicial Cooperation in Criminal Matters’. The status quo in relation to investigations and proceedings commenced before the end of the implementation period is maintained. This includes requests or judicial orders received by the appropriate authority in the UK or EU prior to the end of the implementation period. Thus, European Investigation Orders (“EIOs”) issued before 31 December 2020 will continue to be executed, but new EIOs may no longer be issued by the UK or by EU member states to the UK. Mutual legal assistance arrangements will need to be relied upon instead, leading to inevitable delay and cumbersome administrative procedures. 

Trade and Cooperation Agreement

The Trade and Cooperation Agreement (“the Agreement”),²  concluded between the UK and EU on 24 December 2020, governs the post-implementation period relationship. Part 3 of the Agreement concerns ‘Law Enforcement and Judicial Cooperation in Criminal Matters’, and covers the following areas: 

• DNA, fingerprints and licence plate information (Title II)
• Transfer and processing of passenger name record data (Title III)
• Exchanges of operational information (Title IV) 
• Cooperation with Europol (Title V)
• Cooperation with Eurojust (Title VI)
• Surrender (Title VII)
• Mutual legal assistance (Title VIII)
• Exchange of criminal record information (Title IX) 
• Anti-money laundering and counter-terrorism financing (Title X)
• Freezing and confiscation orders (Title XI)

Continuing cooperation with Europol and Eurojust

The UK ceases to be a member of Europol and Eurojust, the EU’s cross-border law enforcement and prosecution agencies. Although the UK will continue to cooperate with both agencies, its influence is considerably reduced and it will no longer be involved in the management of the agencies. The UK is obliged to second one liaison officer to Europol and one liaison prosecutor to Eurojust, who will be entitled to attend Europol/Eurojust meetings. In turn, Europol and Eurojust have the right, but not a duty, to second one or more liaison officers/liaison magistrates to their UK counterparts. Europol and the UK may exchange information such as specialist knowledge, general situation reports, results of strategic analysis, information on criminal investigation procedures, as well as advice and support in individual criminal investigations. There will be continued participation in training activities. Any information shared between the UK and Eurojust may not be disclosed to a third country or international organisation without the sender’s consent. 

Surrender

The availability of the European Arrest Warrant (“EAW”) in the UK came to an end with the implementation period. The new regime known as ‘surrender’ is based in essence on the mutual recognition of arrest warrants issued by another state, albeit within limits. It bears close resemblance to the arrangements already in place between the EU and the EEA states of Iceland and Norway. 

There are three key differences between EAWs and surrenders under the Agreement: 

1. States can elect to refuse a surrender request on the basis that the underlying offence is ‘political’, unless the offence is related to terrorism as defined in the Agreement. 
2. States can elect to refuse to surrender their own nationals or attach conditions to the surrender of their own nationals. The Agreement starts with the premise that execution of a surrender request may not be refused on the basis that it concerns a national of that state, but then goes on to allow states to notify such a refusal “based on reasons related to the fundamental principles or practice of the domestic legal order.” Several EU member states have already confirmed that they will no longer extradite their own nationals to the UK.³
3. Dual criminality is generally required, although there are exceptions.  Individual states may agree to a reciprocal waiver of this requirement for particular offences listed in the Agreement. The list is relatively long and includes participation in a criminal organisation, illicit trafficking in narcotics or arms, corruption and bribery, fraud, money laundering, computer crime, racketeering and extortion, and forgery of documents. 

The surrendering state may require certain guarantees from the requesting state before executing an arrest warrant.  They could, for example, require review of life sentences at the latest after 20 years, or a guarantee that a prisoner may serve their sentence in their home country should they so wish.  Additional guarantees may also be required where considered necessary for the protection of fundamental rights.

However, like other measures and judicial orders, EAWs remain enforceable if they were issued before the end of the transition period. Thus, the English Divisional Court recently considered the legal basis for the continued detention of persons arrested pursuant to such EAWs, who had not been extradited before the end of the transition period.⁴ The Court refused the applications for habeas corpus and for judicial review. Both domestic law and the EU Framework Decision, read alongside the Withdrawal Agreement, provide that EAWs issued by the end of the transition period remain executable. This applies whether or not a domestic extradition order in response to the EAW has been made. 

Mutual legal assistance

As stated above, EIOs can no longer be issued by or to the UK, with the consequence that mutual legal assistance arrangements will need to be relied upon instead. At Council of Europe level, the European Convention on Mutual Assistance in Criminal Matters of 1959, plus two Additional Protocols, will assume greater relevance now that the UK is outside the EU system of judicial cooperation.⁵ In addition to the grounds for refusal set out in the Convention, the Agreement also sets down a broad ne bis in idem principle, i.e. where a matter has already been adjudicated on in another state, that state may refuse to comply with a mutual legal assistance request. 

The Agreement establishes a Specialised Committee on Law Enforcement and Judicial Cooperation, one of whose tasks is to develop a standard form for mutual legal assistance requests between the UK and EU members. It is envisaged that such requests may only be issued if (i) doing so is necessary and proportionate for the purpose of the proceeding or investigation, taking into account the rights of the suspect, and (ii) the investigative measure sought could have been ordered under the same conditions in a similar domestic case. Where the measure sought is not available under the local law of the requested state, alternatives must be considered, although certain measures should always be available: 

• Access to information held in directly accessible police or judicial databases 
• Hearing of a witness, expert, victim, suspect, accused or third party
• Any non-coercive investigative measure as defined under the law of the requested State 
• Identification of a person holding specified phone/IP subscription
  

A decision on a mutual legal assistance request must be made within 45 days. The request should then be acted upon as soon as practicable, and in any event within 90 days from the decision.  

Joint Investigation Teams

The Agreement expressly provides for Joint Investigation Teams (“JITs”) between UK and EU member state investigating authorities. However, the Agreement is largely silent on the detail, except to stipulate that where a JIT involving more than one EU member is set up, the relationship between the EU members will be governed by EU law, regardless of the law stipulated in the JIT agreement. 

JITs are an important tool in cross-border investigations into financial and white collar crime. For example, a JIT was established between the UK’s Serious Fraud Office and France’s Parquet National Financier, enabling close cooperation between those authorities in the Airbus investigation, leading to the global settlement⁶ of the Airbus case in 2020, on which Dechert acted for Airbus (see here).  The effective use of JITs may often require compromise of an individual agency’s narrow interests in favour of the overall interests and goals of the JIT. Changing political mood and relations have the potential to affect the willingness and ability to cooperate and compromise in this forum.

Conclusion

Much like the impact of Brexit itself, the detailed repercussions of the Agreement for white collar and financial crime investigations and enforcement remain to be seen. The future status of the UK and of London in particular as a global financial and business hub will affect the global clout of UK agencies such as the SFO, NCA and FCA. In this time of uncertainty, UK, EU and international corporations and individuals concerned about their exposure should seek legal advice. At Dechert, we have a market-leading team of litigators with specialist experience in complex cross-border investigations, ideally placed to assist and advise clients on the Brexit implications for bribery, corruption and fraud investigations. 

Footnotes

1) https://ec.europa.eu/info/relations-united-kingdom/eu-uk-withdrawal-agreement_en 

2) https://ec.europa.eu/info/relations-united-kingdom/eu-uk-trade-and-cooperation-agreement_en 

3) Croatia, Finland, France, Germany, Greece, Latvia, Poland, Slovakia, Slovenia and Sweden. Austria and the Czech Republic will surrender suspects to the UK only with their consent.  

4) R (Polakowski) v Westminster Magistrates Court [2021] EWHC 53 (Admin) (Dame Victoria Sharp P, Holroyde LJ, Chamberlain J). 

5) https://www.coe.int/en/web/conventions/full-list/-/conventions/treaty/030

6) Also involving the U.S. Department of Justice and Department of State.