Managing Multiple Residences During Investigations
Owning properties in more than one country can be convenient, luxurious and even a worthwhile investment. But homes in numerous jurisdictions can become an issue that needs to be addressed if an investigation is then commenced into those who own or have a financial interest or connection to such properties.
The authorities could potentially obtain freezing orders on assets, conduct tax audits or have travel restrictions imposed on those with connections to properties. All these steps can prevent individuals having access to and / or gaining full enjoyment of their property portfolio.
This article outlines how HNWIs can protect that access to their residences, maintain legal ownership rights, and manage the tax or legal risks that can be associated with owning property in numerous jurisdictions.
How Financial Investigations Affect Multi-Jurisdictional Property Ownership
A financial investigation into a HNWI will be looking to identify all that person’s assets. That will include all that person’s properties - regardless of what countries those properties are in, which country (or countries) the authorities are from that are conducting the investigation, and the national or multinational scope of the investigation.
This can mean that such properties could become subject to asset freezes, seizure by the authorities or – at the very least – in-depth scrutiny from investigators looking to determine how the person who bought or controls them is able to do so. In the UK, for example, unexplained wealth orders (UWOs) can be used to compel people to explain how they were able to afford an asset, such as a property. If the authorities are not satisfied with the explanation, the property can be confiscated, as has happened in some high-profile cases.
The laws in relation to property ownership and assets seizure differ from country to country. But increased cooperation between authorities in various countries investigating alleged wrongdoing has made them more effective when it comes to targeting a person’s properties that are in a number of jurisdictions.
Understanding Freezing Orders and Property Ownership Risks
A freezing order is an order issued by a court that means a person (meaning an individual or an organisation) cannot dispose of, move or deal with the assets that are the subject of the order. The authorities can apply for a freezing order as part of an investigation and the order can apply to any type of asset, including a home.
If an authority is successful in applying to a court for a freezing order on a property, this does not mean that it has any rights of ownership over it. But it does mean that nothing can be done with that property until matters are concluded – its owner cannot sell it, remortgage it or transfer ownership of it to someone else. When the authorities have concluded their investigation, they may return to court to apply for the property to be seized from its owner or may (if the investigation has found no evidence of wrongdoing) end their interest in the property; allowing its owner all the rights of ownership they had before the freezing order came into effect.
A freezing order can also apply to property held by a third party, such as a family member or trustee, if the court accepts the authority’s argument that the original owner is still controlling that property. Any property owner that knowingly breaches the terms of a freezing order can be held in contempt of court, which can lead to a fine, asset seizure or even a prison sentence being imposed.
Freezing orders can have a serious effect on those whose assets are made the subject of one. They can prevent a person gaining access to their finances, lead to them being viewed as a risk and cause severe difficulties when it comes to maintaining normal financial relations with personal or business associates. Those whose residence (or residences) are made the subject of a freezing order face great uncertainty, as they will not know whether they will be able to retain their home (or homes) until the authorities have completed their investigations that led to the freezing order.
Legal Strategies for Retaining Access to Your Homes
As is explained above, a freezing order can have a very limiting effect on the owner of a property that is subject to such an order. But there are steps that can be taken to protect yourself against a freezing order.
It is important to emphasise, however, that any person whose home (or any other asset) is made the subject of a freezing order has to respond promptly and seek expert legal advice. Only by doing this can they have the strongest possible chance of successfully challenging the terms of the freezing order.
This can be done through a number of ways, including:
- Making an application to vary the freezing order: A legal representative can apply to the court to change the terms of the freezing order on behalf of the person whose assets are subject to it. For example, a person may seek permission to have greater access to their money that has been frozen, so they can meet living or business expenses.
- Seeking to have the order discharged: An application can be made to have the freezing order discharged on the grounds that the person or organisation that successfully applied for the freezing order did not provide full and frank disclosure to the court when doing so or has no arguable case against the subject of it.
- Arguing the order is unnecessary: This could be done, to take one example, because there is no risk of the assets in question being dissipated (frittered away), moved or transferred to others.
- Arguing that the order is too oppressive.
Tax Residency Considerations and Compliance Risks
For those living and / or doing business in more than one country, it is important to understand which country is legally entitled to tax their income. A failure to do this correctly can lead to financial penalties being imposed, being taxed twice on the same income or a range of other legal and financial difficulties.
Tax residency for individuals is determined by a range of factors, many of which vary from country to country. These factors can include the number of days a person spends living and working in a country during a tax year (or number of tax years), as well as whether they have a home and / or family in that country. Some countries allow for what is called a split tax year when a person moves in or out of a country, so that a person is not taxed on their full worldwide income for the entire year. Arrangements may also be in place between countries to ensure a tax resident of two different countries is not taxed twice on their income.
For companies, the situation can be more complicated. Businesses with multinational operations and senior management and bases in various countries may face a far from straightforward challenge when it comes to meeting their tax obligations.
Risks
Individuals and companies can face situations that are laden with risk when it comes to the issue of tax residency. Any mismanagement of tax residency status - or a failure to report it accurately – can lead to financial penalties, double taxation and the prospect of an investigation. Such an investigation can be damaging legally, professionally and in terms of reputation and ability to continue operating as normal.
It is important, therefore, that the tax risks of living and operating in more than one country are minimised.
This can be done by:
Keeping comprehensive records of dates of travel, flight details and accommodation information so that it can be proved where you have been and for how long.
Retaining all documents and records relating to individual and company matters such as employment contracts, rental and lease agreements, utility bills, board meetings and bank accounts.
Obtaining professional advice to ensure you know and comply with all tax residency rules in the countries where you spend time; including any agreements between countries relating to double taxation.
Seeking advice whenever your circumstances change and / or as part of a regular review of your situation.
Selling or Transferring Property During an Ongoing Investigation
If an investigation is ongoing, it does not necessarily mean that property cannot be sold or transferred by the subject of that investigation (whether an individual or a company) or those with personal or business connections to them. But there may be aspects of the investigation that do forbid this.
A court order may have been applied for by the investigating authorities. If this application is (or has been) granted by a court, the order may prohibit the sale or transfer of property during the investigation. It should also be emphasised that any attempt to sell or transfer property that the authorities consider to be proceeds of crime is a serious offence that can carry severe penalties.
The main issues that need to be considered regarding the sale or transfer of property during an investigation are:
- Restraint orders: In the UK, a serious criminal investigation can lead to assets being confiscated under the Proceeds of Crime Act 2002 (POCA). This can, at any stage of the investigation, mean a restraint order is issued by a court. A restraint order has the effect of prohibiting any person from dealing with (including selling or transferring) any particular property. This is done to ensure that the property is available if and when a confiscation order relating to it is made under POCA. Any breach of a restraint order can lead to severe penalties being imposed.
- Lis pendens: If the ownership of a property is disputed and subject to civil litigation, a lis pendens notice can be filed in public records. While the sale of the property that is subject to this notice can still, technically, proceed, it may prove difficult to sell because it is subject to an ongoing legal claim. While this is something associated with legal disputes, it is a situation that may arise during an investigation.
- The property is evidence: In certain situations, the property may be an important part of the investigation and cannot be sold or transferred. For example, it may be the scene of the crime that prompted the investigation and may be needed for forensic examination and then, later on, during court proceedings.
In many circumstances, you may have the legal right to sell your property to cover legal fees or to pay for other necessities. But any attempt to do so to thwart an investigation can be viewed as a serious offence. It is important that informed advice is sought about what can and cannot be done once an investigation has begun or looks about to begin.
Managing Security and Confidentiality in High-Profile Real Estate Holdings
When it comes to real estate, ensuring both security and confidentiality requires an approach that addresses all the possible risks. It needs to include physical security as well as digital protection and practices and procedures that go as far as possible to “design out’’ the dangers.
Physical security
Physical protection of a house can involve anything from traditional approaches such as fencing, locked access gates and doors, and security patrols through to state-of-the-art exterior lighting and CCTV, alarms, entrance systems, fingerprint or facial scanners and secure rooms. Which combination of these works best will depend on the property in question and what is inside that needs to be protected.
While advice should be sought from those who can determine the best way to make sure security and confidentiality is paramount, devising and installing a security regime should not be seen as the end of the process. It is important that regular reviews of the arrangements are carried out and, when necessary, revisions are made to ensure that any changes to the potential risks are addressed.
Digital protection
Protecting sensitive information that is held online or in other non-physical formats can be as important as the aforementioned physical security.
Details of finance, records of business activities and individuals’ confidential information can be important for personal and commercial reasons. It needs to be encrypted while in storage and while being transmitted and the systems it is held on have to be using the best anti-virus software, firewalls and intrusion detection tools. Rigorous password, identity authentication and communication practices need to be in place to enhance this protection.
On a “human’’ level, appropriate procedures need to be devised and introduced regarding restrictions on access to confidential data, cybersecurity training of staff and family members, and vetting of all third parties. In addition, legal techniques such as non-disclosure agreements (NDAs), contract confidentiality clauses and doing business through trusts or limited liability companies can prevent information becoming widely available.
What to Do If Authorities Restrict Access to Your Homes
The police and other authorities do have the power to access a person’s home as part of an investigation. But there are restrictions on their power to do this.
In the UK, the authorities usually require a warrant issued by a court to enter a premises or a reason detailed in the Police and Criminal Evidence Act 1984 (PACE), such as an emergency.
In such situations, they can restrict a person’s access to their own home. But if someone believes this denial of access is unjustified, they can:
- Ask for a clear explanation from the police (or any other authority involved) of the reasons why access is being denied, including written proof of their authority to do this.
- Record the date and time of the access being denied, as well as the names, ranks and badge numbers of the police officers involved and any damage caused.
- Seek legal advice about the grounds for challenging the denial of access and / or seeking compensation.
- File a formal complaint with either the police force denying the access or the Independent Office for Police Conduct (IOPC).
International Travel Considerations
An investigation into an individual’s, company’s or organisation’s affairs can have a significant impact on the ability to travel of those involved.
Depending on the nature and seriousness of the case, anyone whose conduct is examined as part of an investigation could find themselves subject to travel restrictions imposed by a court, Interpol notices, difficulties in obtaining the necessary visas and close scrutiny at borders.
This can be problematic for individuals who are used to travelling internationally on a regular basis; especially if such travel is required to manage personal or business affairs. So it is important to know what you can and cannot do in terms of travel if you are the subject of an investigation.
How Legal Investigations Affect International Travel – Travel Restrictions, Passports, Visas and Interpol Notices
There are a number of ways an investigation can limit a person’s ability to travel. For many people, it can be important to recognise both the effect this can have on their activities and the ways this can be addressed.
If you are released on bail as part of an investigation you can be subject to a range of bail conditions.
These can include:
- Surrendering your passport so you cannot leave the country.
- A residency requirement that orders you to live at a named address.
- An obligation to report to a police station at regular intervals.
Anyone breaching any such conditions can be arrested and may face extra charges – and it will certainly not help regarding the outcome of the original investigation. But it is possible to apply to the court, through your solicitor, to have your bail conditions varied. This will require a strong case to be made to the court, explaining the importance of you being allowed to travel, giving assurances (and reasons why) you will return, and even arguing that the current bail conditions impose unnecessary hardship.
If a case is set to come to trial, a court (if it has not done so already) can impose travel conditions. This is more likely in cases involving serious offences and / or when there is believed to be a flight risk – a chance that the person set to be tried may look to leave the country to escape justice.
Anyone applying for a visa to enter a country may, depending on the country, have to disclose their spent and unspent convictions. In addition, a person who is the subject of a formal investigation may not qualify to be able to enter a country through its standard visa waiver programme. This can mean they have to go through a more complicated visa application process than others who want to enter that country – and they may still be denied entry. Foreign immigration officials have the power to deny entry to their country if a person has a criminal history.
For the more serious offences, the police in the investigating country can issue an Interpol Green Notice. This alerts immigration officials around the world to a person’s passport and can mean they are then stopped at a border and denied entry to a country.
What to Do If You Face Increased Border Scrutiny
A person under investigation may well be subject to more scrutiny than other individuals if they attempt to enter another country.
Officials on the borders of a country such a person is trying to enter may already be aware that the person is subject to investigation. They may have been alerted by the authorities in the country where the investigation is being conducted. If the person has had to apply for a visa to enter the country, they may have had to disclose that they are under investigation, or it may have been discovered by that country during the visa application process. There may have even been an Interpol notice issued, alerting all countries to that person being the subject of an investigation.
However it has become known that a person trying to enter a country is under investigation, it increases the chances of them coming under greater examination by border officials.
Response
If you are, for whatever reason, subject to increased scrutiny at an international border, it is important to ensure your response is appropriate, given the seriousness of the circumstances and your need to enter that country.
You need to stay calm, give polite and truthful answers to any questions asked by border officials, and have all relevant travel documents with you and ready to be shown if asked for them. You should be prepared for more in-depth checks than would be the case if you were not associated with an investigation. For example, there will be an increased possibility that your electronic devices may be checked thoroughly. And it will be advisable to have contact details for your lawyer with you in case any issues arise; including you being denied entry into the country.
Ensuring such a response requires careful preparation before you travel – and an awareness of your legal options. You do have the right to withdraw your application to enter the country, so you can then return to where you travelled from.
Managing Visa and Residency Renewals During Legal Uncertainty
The issue of residency and visa applications is key to many people whose personal or business activities involve them living a cross-border existence. Living a multinational life can bring obvious benefits. But it can also present challenges in terms of obtaining the relevant paperwork and ensuring residency status is officially recognised.
Such challenges can become more daunting during times of legal uncertainty, such as when a person who lives such a life faces an investigation in one country where they spend time. In such a situation, a person must take all possible steps to ensure they are fully informed about the rules that apply to them and be fully compliant with them.
This involves a number of actions:
Following official sources: Government websites will provide accurate, up-to-date information about all rules relevant to visa applications and residency. Any changes will be published as they are made. Such sources should be checked regularly for any changes that may apply to your circumstances.
Acting at the right time: All applications for visa renewals should be made well in advance. Doing this will ensure there is no gap between the expiry of one visa and the granting of the renewal. A failure to do this will result in a person losing (at least for a period of time) the legal right to remain in a country. Any overstaying of a visa can have damaging consequences for current and future visa applications.
Providing full documentation: If a visa is to be granted (or renewed), the applicant has to provide all the documentation required at the time. Failure to do this can lead to an application being delayed or even rejected. It is important to retain all paperwork and records that may be required for an application.
Seeking appropriate legal advice: If a person’s right to stay in a country looks to be either in doubt or more complicated than normal, obtaining advice from an experienced lawyer with the relevant expertise will be the best way to address any potential problems and, if necessary, mount legal challenges to an unfavourable decision.
How to Travel Securely Without Raising Red Flags
Travelling securely without raising any red flags is what most, if not all, people want to do. But this can be particularly important to HNWIs and business figures, who may need to reach their destination or their meeting on time and with no disruption in order to sort out important personal or financial affairs.
To do this, however, requires a degree of preparation when it comes to the logistics and the necessary documentation, as well as a calm approach and following all security rules without creating any sort of incident.
Achieving all of this involves a number of strategies. These include:
Making preparations: Buy your travel tickets (such as flights and transfers) from a trusted, reputable agent. Print out physical copies of your passport, travel insurance and all travel information. If possible, save everything on a secure cloud platform. Take the time to ensure that all such information is packed safely and securely, so it is not at risk from the weather, thieves or simply being mislaid.
The correct approach immediately before and during travel: Ensure you have all necessary documents (such as passports and visas) available and ready to be presented and check you are complying with rules regarding carrying of liquids, electronic devices and prohibited items. Listen to (and follow) all instructions from security officers. Ideally, pack light, secure your valuables and dress for comfort in clothes that will not attract attention from either staff or would-be thieves.
Travel behaviour: Be polite and respectful to staff, ensure you are doing nothing to delay other passengers and pay attention to your surroundings. Avoid making jokes about security or other transport-related issues
Behaviour at your destination: Research local laws and customs to reduce the risk of causing incidents or committing offences. Avoid known high-risk areas. Stay alert in busy areas and make yourself aware of common local scams. When going out, be careful regarding personal information when using wi-fi networks, leave a copy of your itinerary and passport information with a trusted relative or associate, and take numbers of emergency contacts (such as the embassy or nearest hospitals) with you. Do not allow yourself to be distracted by anyone you do not know and trust your gut instinct if something does not seem right.
For many, travel is an essential component of their everyday life. Generally speaking, the greater the distance travelled, the more precautions need to be taken, and the more preparations made so that the travel is a smooth experience. A correctly thought-out approach can ensure this happens.
Navigating Diplomatic Protections and Special Considerations for PEPs
Politically Exposed Persons (PEPs) are individuals who have prominent public functions. Due to this, they are regarded as having positions of influence. This has led to them being viewed in the eyes of the law as possible high risks when it comes to bribery, money laundering or other forms of financial crime. PEPs is a group of individuals that includes elected officials and government employees and their relatives and close associates. All of whom face greater scrutiny because their access to resources and influence puts them at more risk of involvement in illegal activities than “normal’’ people.
The issue of PEPs is one that governments and businesses have been trying to manage for many years. But this is a challenge for PEPs themselves, who have to carry out their activities while being subject to intense scrutiny in the countries where they are based. PEPs need to be aware of the legal obligations placed on them. They also need to expect that due diligence will be carried out on them by financial institutions, legal firms and other organisations who are legally obliged to conduct checks before and during any dealings with PEPs. This is a process that involves identifying a person as a PEP and examining their circumstances, such as their country of origin, the exact position they hold and the influence they have. It also means scrutinising that person’s relationships and transactions, so the level of risk they pose can be assessed and appropriate measures devised to manage and monitor it.
To take the UK as an example, PEPs are categorised into three main types:
- Foreign PEPs: Individuals that hold prominent public positions or carry out significant functions in foreign countries. They include heads of state or government, senior politicians, high-ranking officials in the government, judiciary or military, top-level figures in state-owned companies, and important political party officials.
- Domestic PEPs: Individuals that hold significant public offices within the UK – those who hold the UK equivalent positions of those held by foreign PEPs.
- International organisation PEPs: Those holding positions in an international organisation; including members, senior staff, directors, deputy directors, and members of the board or equivalent functions.
Such classification of PEPs and the scrutiny they come under can be justified by the number of cases of financial crime that have involved them. In the UK, legislation relating to PEPs includes the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
These place obligations on financial institutions and other organisations to undertake enhanced due diligence when dealing with PEPs. This can be difficult due to factors such as:
- Changing circumstances: The role or activities of a PEP may change, either over time or suddenly if they are moved to another position. This makes it necessary for a whole new assessment of that PEP to be carried out.
- New PEPs: The lists kept by the authorities of PEPs is subject to frequent change. A person may be removed from the position that led to them being designated as a PEP or may die or retire. All these situations will mean a new person taking up the position, who will have to be fully risk assessed.
- Balancing interests: Many of those who have to risk assess PEPs (such as financial institutions) have to strike a balance between meeting their legal obligations to do this while also looking to pursue legitimate business deals. This can require a lot of time, effort and resources.
- No room for bias: PEPs will pose differing levels of risk and those who have to assess them need to be careful not to be biased. No blanket assumptions can be made about PEPs who all hold the same or similar positions or who come from the same country. While this may appear a convenient option for those with the task of assessing PEPs, it would clearly be wrong – there can be no short cuts taken when it comes to this.
- Changing regulations: Nationally and internationally, the regulatory landscape regarding PEPs is continually changing. Those who have to assess PEPs need to ensure they are meeting all the regulations as they are introduced. They cannot view an assessment of a PEP as a one-off task.
It should never be forgotten that the situation that PEPs face is an arduous one for them – one which may seem harsh and uncalled for if they pose no genuine risk and yet face far greater scrutiny than “normal’’ individuals. The complexities of PEP compliance in the UK (and many other countries) require an intelligent and fully-informed approach
Using Legal Avenues to Challenge Travel Restrictions
As this section has indicated, the issue of travel can be far from straightforward if the authorities in one or more countries believe there are reasons to scrutinise an individual or number of individuals.
The grounds for such an approach and the forms that this can take can vary greatly, depending on factors such as the authorities involved and the precise nature of their concerns about an individual. In addition, any set of circumstances can lead to a response in one country that may differ hugely from how another country would respond in the same situation.
But whatever the exact situation is, it is important that anyone who has their right to travel restricted (or believes that it is about to be) seeks professional help from those who can assess, understand and respond swiftly, appropriately and robustly to the circumstances, in order to achieve the best possible outcome.
Children's Education and Family Mobility
Financial crime investigations are conducted due to suspicions about the conduct of one or more individuals and / or those associated with a company or organisation.
But this can have a serious effect on friends and relatives of those under investigation. This can present a particular challenge regarding children, who may be more susceptible to the upheavals that can result such a situation. Family stability during such times can come under pressure. Issues such as relocation, the need to ensure continuity in children’s education, and protection from media exposure and reputational harm may all need to be managed carefully.
How Investigations Affect Children’s Education and Stability
Whatever the exact nature of an investigation, it can cause stress to a child. If it means that the family has to relocate – either permanently or temporarily – this can mean a child has to change schools, which can be a difficult adjustment for them.
But even if relocation is not necessary, the fact that a parent or guardian is detained by the authorities or subject to regular questioning or ongoing restrictions in their day-to-day life can be noticed by a child. This can be enough to cause distress to them. While this may lead to difficulties within the family, it can also have a harmful effect on a child’s ability to maintain relationships with others, such as friends or teachers.
An investigation, therefore, can have a serious impact on many aspects of a child’s life. Which is why care must be taken to do whatever is possible to reduce that possibility.
Legal Issues and Choosing the Right Jurisdiction for Family Relocation
While relocation of a family can, in certain circumstances, be the best course of action, it is important to take time to choose the right destination; especially if a cross-border move is being contemplated. If that is the case, choosing the right jurisdiction requires careful assessment of practical and legal issues; especially if the relocation involves children.
When it comes to choosing a jurisdiction, it will be necessary to seek legal advice in order to understand the relevant laws in any jurisdiction that is being considered as a potential destination. This will be especially important if the relocation is happening at a time when an investigation is ongoing in the home country that involves a family member: there will be a need to establish whether that person is allowed to leave the country and if / how the investigation can proceed if they are now based in another jurisdiction.
Away from the issue of an investigation, matters such as residency and visa requirements, accommodation, schools, healthcare, access to finance and the ability to remain in contact with relatives, friends and business associates also need to be thought about before any firm decision about relocation is made.
Taking legal advice at the earliest possible stage can give a family a clearer picture of what they can do and the potential pitfalls of taking certain courses of action. In situations where relocation to another location involves children, there are many legal considerations relating to matters such as the child’s welfare and upbringing; including their physical, emotional and educational needs.
Ensuring Privacy and Security for Children in Elite Schools
This is an area that touches on many issues. Practices may need to be put into place relating to digital data, physical security and the relationship with the school.
The encryption of all personal, financial and academic data relating to the child (and access to it) and discussions with (and assessment of) any school that a child may go to need to be addressed at the earliest possible stage. Each situation will be unique, but each will require an examination of the school environment, particularly its staff training and security measures, to ensure any potential risks are identified and managed.
Managing International Tuition and Financial Commitments During Asset Freezes
Making tuition payments and meeting other financial commitments while assets have been frozen can be far from simple. But it can be possible. Asset freezes usually contain some exemptions that enable the subject of one access to some of their wealth so they can cover basic expenses. Basic expenses covers essential payments for things such as food, accommodation expenses, healthcare and education.
A legal representative can explain the limitations on expenditure that have been imposed by an asset freeze. They can also apply to have these limitations varied to allow the person whose assets are frozen more freedom to spend on some necessities that would not otherwise have been allowed under the freeze.
Minimising the Emotional and Psychological Impact - Shielding Family Members from Publicity
An investigation can have repercussions for many more people than those who are being investigated. As mentioned earlier, an investigation can affect issues such as travel and the management of assets, which will have an impact on many relatives and associates of those investigated.
But it can also have an impact on the mental wellbeing of those who are close to the subject of an investigation. Depending on their age, children may not fully understand the reasons for the investigation. But they may be affected by the change in their circumstances that results from it. Similarly, adult relatives and associates may not be aware of all the factors that have led to an investigation being undertaken. But they may realise that they are now - or could be - the subject of media scrutiny and publicity.
It is important, therefore, that steps are taken to ensure children and other loved ones are protected from any fall-out from an investigation. This can mean relocating them to an area where they will attract little or no attention. The careful drafting and issuing of press statements (when this is appropriate and lawful) can go some way to ensuring that the media hunt for information is managed in a way that minimises the potential for distress being caused to those associated with the person or persons being investigated.
Social and Business Network Management
All types of relationships can be placed under strain when an investigation begins. Relatives, friends and business associates may feel that strain. Some may even decide to put some distance between them and those being investigated because they want to protect their own reputation or find it difficult to maintain normal relations in such a situation.
There can be a need, therefore, to manage family, social and business relationships in a way that minimises the potential for stress and damage to the relationship and retains trust.
Handling Social Fall-out and Managing Business Relationships During a Financial Crime Investigation
There is no single way to manage the social fall-out if you are the subject of a financial crime investigation. It will require action on a number of fronts to tackle any potential reputational damage while also ensuring the morale of those closest to you remains high and that you retain the trust of associates.
Communication is key to retaining the trust of investors, business partners, customers, employees and outside observers, including the media. It may be necessary to hire PR advisors to make sure everyone is aware of your response to the allegations that prompted the investigation and to correct any inaccurate reporting of it. In certain circumstances, there may be a real need for crisis communication strategies to be devised and carried out to ensure that all necessary personal and professional networks are kept fully informed of your situation and your perspective on the matter.
During an investigation, thought may also need to be given to such issues as:
* Navigating philanthropic and charitable Involvements
* Managing public appearances and the level of involvement at events
* Who, if anyone, is instructed to make any statements on your behalf
Managing and minimising the potential damage to social and business networks while under investigation will always be a challenge. But the difficulties can be reduced by examining the ways such damage is being or could be caused and then putting in place the appropriate strategy to nullify them.
Private Staff Management During Investigations
An investigation is obviously a serious matter for the subject of it and those closest to them personally and professionally. But if the subject of an investigation is a high net worth individual (HNWI), it can also have implications for those who work for them.
Household staff, personal assistants, security teams, and other private employees can find themselves in the midst of legal issues as well as matters relating to finances or confidentiality. For those under investigation, this presents a need to manage issues relating to loyalty and security, as well as more legally-defined matters such as employment contracts and staff testimony.
Why Household Staff and Private Employees Can Be a Vulnerability
While staff working for someone who becomes the subject of an investigation may not wish any harm to come to their employer, they can pose a legal, privacy and security risk. These matters should be addressed in their contracts before they take up employment. If an investigation then begins into their employer, their knowledge of that person’s private life, finances, assets and behaviour can be something that could be exploited by investigators.
How to Maintain Confidentiality and Trust During an Investigation
While confidentiality can be of vital importance during an investigation, this has to be seen as a priority before the prospect of an investigation has arisen. Assessing just how much access to private information a staff member has is a matter to be considered at the time they are taken on to work in a household or for an individual.
If and when an investigation begins, this can affect how much a staff member can tell investigators. At that time, there may be a need to reassess staff access to information in relation to the investigation. But it is important that the matter of confidentiality has been fully addressed from the start of a staff member’s employment.
When employing someone to work for a household or individual, the following factors need to be considered:
- That person’s access to information: the extent of the access, the nature of the information that is accessible and why such access is to be granted.
- The storage of documents and data, and the availability of it to staff.
- Confidentiality requirements, which can be formalised into agreements that clearly detail staff obligations to keep private matters private.
Reviewing Employment Contracts and Non-Disclosure Agreements (NDAs)
The nature of a person’s work for a household or individual may change over time. As a result, reviewing and revising employment contracts and any non-disclosure agreements (NDAs) may be necessary to reflect those changes.
While such changes may be needed, it is important that they are carried out in full accordance with the relevant law. For example, in the UK, NDAs cannot prohibit employees from making protected disclosures (also known as whistleblowing) or from reporting crimes to police or regulators. But the nature of any employer-staff contract can be reviewed – and circumstances may arise where the employer believes it would appropriate to, for example, restrict staff access to certain facilities or information. Such action may later prove to have an impact on the course of any future investigation.
Managing Security Personnel and Personal Protection Considerations
Security personnel are like household staff and those employed in other positions by individuals and households - they have potential access to a lot of information. Like those other employees, this needs to be recognised in the terms of their employment.
But they differ from those other staff as they have a responsibility for the safety and protection of their employer. They have to assess their employer’s security needs and act accordingly. They need to be conducting threat assessments, varying routines to prevent predictability, making sure residential and / or business areas are secure at all times and protecting personal information. This need may be enhanced during an investigation. To be effective, security and personal protection involves ongoing monitoring, planning and, when necessary, revision of practices.
Legal Risks: Can Private Staff Be Questioned or Subpoenaed?
The law relating to this will vary from country to country. But speaking generally, while the work of private staff may involve regularly dealing with a person’s private or confidential matters, this does not prevent investigating authorities interviewing them. Although staff do have the right to refuse to answer questions unless a witness summons is served on them, ignoring a witness summons (previously known as a subpoena) to give evidence can lead to them being charged with contempt of court.
An employer cannot prevent staff from responding to such orders. And while a private staff member may have signed an NDA, this would be no defence to not complying with a witness summons to give evidence or provide records. But it should be emphasised that if an employer has had in place effective measures that limited staff access to information, those staff may have little to tell investigators anyway.
How to Handle Disputes, Resignations or Staff Leaks
Whether or not an investigation is ongoing, the management of staff disputes, resignations and information leaks is most effective if it involves proactive policy-making to address any potential problems before they arise. This needs to be supported by clear communication and, when necessary, swift impartial action that is fully documented.
Quick, unbiased action can increase the chances of an issue being dealt with as early as possible and in a confidential way. This can be important when it comes to minimising any reputational damage; especially if an investigation is ongoing or looking likely.
Long-Term Staff Management Strategies Post-Investigation
When an investigation is concluded, it will be necessary to reassess the issue of staff management. Depending on the nature and outcome of the investigation, there may be a need to rebuild trust with some (or all) staff, develop a positive work culture and examine how to prevent any recurrence of the problems that prompted the investigation.
This can mean reorganisation, updates to policies and procedures, and ensuring effective communication channels; with those at the top making clear their intention to right the wrongs.
Righting the wrongs will require:
- detailed examination of the findings of the investigation
- incorporation of the findings into new working practices
- introducing the new practices
- ensuring those new practices are both fit for purpose and subject to ongoing monitoring
- keeping staff fully informed of the changes and the reasons for them
- providing any necessary staff training
The changes that are made in this period can be vitally important in removing the prospect of any future investigation.
