SFO Investigations

Any person, business or organisation investigated by the Serious Fraud Office (SFO) needs to know about the agency’s work, its powers, how it functions — and how best to respond to an investigation. This article addresses those issues.

The SFO is an independent UK prosecutorial authority that investigates top‑level serious or complex fraud and bribery and corruption cases. Unlike other UK enforcement agencies, such as the Crown Prosecution Service, it both investigates and prosecutes its cases. Given the sophisticated nature of its cases, the volume of data and the lifespan of a case, the SFO utilises the “Roskill” model, meaning it operates as a joint structure of lawyers, investigators, forensic accountants and other specialists who work together from the inception of a case to its conclusion. It also has a unique range of powers at its disposal — and the first that the subject of an investigation may know about it is when their home or premises is raided. The Director of the SFO may open an investigation where there are reasonable grounds to suspect serious or complex fraud or bribery, taking into account harm to the public, the integrity of the UK as an international financial centre, and the wider economy¹.

The SFO’s remit and powers

Section 2 of the Criminal Justice Act 1987 (“CJA 1987”; “the Act”) empowers the SFO to compel individuals or organisations under investigation, or believed to have relevant information, to answer questions and/or provide information and to produce, explain the contents of, or state the location of relevant documents. These powers may be exercised without a warrant via a “Section 2 notice”.

Where there are reasonable grounds to believe required documents would not be produced, or service of a notice would be impracticable or prejudicial to the investigation, the SFO may apply for a search warrant and SFO staff will normally accompany police constables executing the warrant.

Following the case of Saunders v UK², section 2(8) of the Act limits the use of statements compelled under section 2 against the interviewee to offences such as providing false or misleading information (section 2(14)), or where the interviewee later gives inconsistent evidence. Section 2(8AA) further restricts use in the latter situation unless the issue is first raised by or on behalf of the defendant. In practice, there is no right to silence in response to a lawful section 2 requirement, but there is strong protection against self‑incrimination. Moreover, legal professional privilege is protected, but banking confidentiality may be overridden with customer consent or the Director’s authorisation. Any attempt to adduce compelled material is still subject to the hearsay provisions under the Criminal Justice Act 2003.

Non‑compliance with section 2 without reasonable excuse is a criminal offence punishable by up to six months’ imprisonment, a fine, or both.

As it currently stands, the SFO cannot exercise its section 2 powers extraterritorially. It therefore cannot compel a foreign company or an individual located outside the UK to produce documents or provide information.

The KBR Inc v Director of the Serious Fraud Office³ decision considered whether section 2 powers could be used against a foreign company with UK subsidiaries but no direct presence in the UK. The Supreme Court held that the powers do not extend in those circumstances. However, the Court left open the question of whether section 2 powers might apply where a foreign company has a demonstrable business presence in the UK.

Section 2A CJA 1987 (as amended by the Economic Crime and Corporate Transparency Act 2023) permits use of section 2 powers to determine whether to commence an investigation, increasing the likelihood of early compulsory information requests before a formal investigation opens.

Section 2 interviews differ from Police and Criminal Evidence Act 1984 (“PACE”) suspect interviews in that they are non‑cautioned, compelled interviews. A lawyer may attend at the SFO’s discretion under operational guidance. This is typically limited to one representative who must comply with strict conditions (e.g., non‑disclosure of interview content to anyone other than the client without SFO authority and restrictions on handling documents).

Responding to an SFO investigation

The SFO’s powers and the way it functions make its investigations distinct from those conducted by other agencies. They can be lengthy, complex and data‑heavy. The right response from the outset often determines the outcome.

Swift and well‑targeted challenges can significantly influence the progression or dismissal of a case. These challenges may involve contesting the legality of a raid, the admissibility of evidence and the credibility or expertise of witnesses. Search warrants may be challenged through a judicial review in the High Court on procedural irregularities, misleading or incomplete information provided to the court or the warrant being too broadly drawn. If such a challenge is successful, warrants may be quashed and any seized property returned. This was highlighted in cases such as R (on the application of Brook) v Preston Crown Court⁴, where warrants were set aside due to insufficient clarity and precision, and R (on the application of Superior Import/Export Ltd) v Revenue and Customs Commissioners, where warrants were deemed unlawful for failing to meet the safeguards under PACE 1984; such as specifying the material sought and its relevance to the investigation.

Furthermore, an application for the return of the whole or part of the seized property can be made under section 59 of the Criminal justice and Police Act 2001 under certain conditions, including where the order was unlawful or it contains items subject to legal privilege.

Section 21 of PACE (and PACE Code B) provides a right of access to seized material. Under this provision, individuals who had custody or control of the material before its seizure can request access or copies of the material. However, access may be denied if it would prejudice an ongoing investigation or criminal proceedings. This ensures a balance between the rights of individuals and the integrity of investigations.

The Attorney General’s Guidelines on Disclosure explicitly address pre-charge disclosure, particularly in the context of pre-charge engagement. Annex B of the Guidelines highlights that pre-charge engagement is voluntary and may involve issues such as providing the suspect with an opportunity to comment on further lines of inquiry or the identifying of exculpatory evidence. The Guidelines emphasise that disclosure of unused material should be considered during this process to ensure fairness and prevent any misleading of the suspect about the strength of the prosecution case. However, the defence cannot compel such engagement from the prosecution at this stage.

Additionally, the Criminal Procedure and Investigations Act 1996 Code of Practice requires investigators to record and retain all relevant material obtained during the investigation which may later become subject to disclosure obligations. This duty to retain material applies from the outset of the investigation, including the pre-charge stage, ensuring that relevant material is preserved for potential disclosure if the case progresses.

For suspects, this framework means they must be cautious about their actions and communications during the investigation. They should avoid any conduct that could prejudice the investigation, such as falsifying, concealing, or destroying relevant documents, as this could constitute an offence.

First steps for corporates

• Instruct specialist counsel and form a core response team. Ensure the team includes external legal counsel with relevant expertise and IT forensics, HR and PR professionals. This team should be prepared to address immediate legal, operational and reputational risks.
• Ensure the preservation of both physical and digital evidence.
• Instruct staff on dawn raid procedures and ensure privilege protocols are in place to avoid inadvertent disclosure of privileged information.
• Manage communications to employees, direct them not to delete data and provide access to independent legal advice.
• Consult legal and PR teams to manage reputational risks effectively.
• Treat section 2 notices as mandatory and respond within deadlines. Ensure no privileged material is disclosed.
• Consider whether search warrants can be challenged and whether you can request the return of your property. Maintain a detailed log of the search and seek access to the record of items seized and copies of seized material, provided this does not unreasonably hinder the investigation.

First steps for individuals

• Seek immediate legal advice upon any SFO contact, particularly when served with a section 2 notice. Understand the implications of compelled interviews under section 2.
• Clarify your status early - whether you are a witness or a suspect. Witnesses are generally not subject to the same level of scrutiny or compulsion. However, they may still be required to provide information or documents relevant to the investigation. Suspects face potential criminal charges and must carefully navigate their interactions with the SFO to avoid self-incrimination or prejudicing the investigation. Witnesses, while not under suspicion, must still comply with legal obligations to provide truthful information and may face legal consequences for non-compliance or obstruction.
• Answer section 2 questions truthfully, as inconsistent answers or misleading the SFO can lead to further offences.
• Preserve all relevant data and documents.

Co‑operating with the SFO and DPAs

Disputing allegations and co‑operating are not mutually exclusive. In appropriate cases, self‑reporting and meaningful co‑operation can materially affect the outcome of an investigation.

Cooperation with the SFO is a critical factor for organisations seeking to avoid prosecution and instead negotiate a deferred prosecution agreement (DPA). The SFO expects cooperation to go beyond mere compliance with legal obligations, requiring genuine and proactive assistance in its investigations. This includes prompt self-reporting of suspected wrongdoing, preserving and providing evidence in an evidentially-sound format and facilitating access to witnesses and relevant materials. The SFO’s Corporate Cooperation Guidance outlines specific behaviours that demonstrate cooperation, such as identifying individuals involved in misconduct, providing financial information on the harm caused, and ensuring transparency in internal investigations.

A DPA is a formal agreement between the prosecutor and an organisation under investigation, which is approved by the court and allows the organisation to avoid prosecution by fulfilling certain conditions. DPAs are a discretionary alternative to prosecution available to corporates only. They were introduced by the Crime and Courts Act 2013 (Schedule 17). The DPA Code of Practice, published jointly by the SFO and the Crown Prosecution Service (CPS), provides prosecutors with the criteria for entering into a DPA. Furthermore, a judge must be satisfied that a DPA is in the interests of justice and that its terms are fair, reasonable and proportionate. Typically, there is a private preliminary hearing followed by a final public hearing with published reasons.

Cooperation is a key factor in determining whether an organisation is invited to negotiate a DPA. The SFO Cooperation Guidance⁵ establishes a presumption that organisations which self-report promptly and demonstrate genuine cooperation will be invited to negotiate a DPA, barring exceptional circumstances. The DPA Code of Practice further emphasises that cooperation, including the provision of comprehensive and accurate information, is a significant factor in favour of a DPA.

The role of DPAs extends beyond avoiding prosecution; they also impose ongoing obligations on organisations to cooperate with the SFO and other law enforcement agencies. For instance, DPAs typically require organisations to report any further evidence of misconduct and assist in investigations or prosecutions of individuals involved in the wrongdoing. This ongoing cooperation is seen as essential to ensuring accountability and compliance with the terms of the agreement.

In summary, cooperation with the SFO is pivotal for organisations seeking a DPA. It involves proactive engagement, transparency and adherence to the SFO’s expectations as outlined in its Corporate Cooperation Guidance and the DPA Code of Practice. DPAs provide organisations with an opportunity to avoid prosecution while committing to remedial actions and ongoing cooperation with law enforcement authorities.

Core expectations for corporates:

• Report suspected wrongdoing within a reasonable timeframe once it has been identified.
• Go beyond legal minimum requirements to show genuine and proactive cooperation. Provide timely, complete and accurate information.
• Secure and preserve relevant documents and data as early as possible.
• Provide structured access to relevant materials (including overseas evidence where within your control).
• Identify key actors and provide relevant factual information relating to individual misconduct.
• Facilitate access to witnesses where appropriate.
• Engage with the SFO on scope and timing of internal investigative steps.
• Avoid actions that could prejudice the SFO’s investigation.
• Ensure legal privilege is respected. But waiver of privilege regarding interview materials may strengthen cooperation credit.
• Demonstrate strengthened controls, governance and compliance culture.
• Take disciplinary action where appropriate.
• Maintain open and constructive dialogue with the SFO throughout the process.

Co‑operate or contest? A balanced strategy

A balanced approach should be taken when dealing with SFO investigations, combining cooperation with contesting actions such as search warrants. Cooperation with the SFO is often encouraged and can be advantageous, particularly in mitigating the seriousness of an offence or in seeking resolutions such as DPAs. However, this does not preclude contesting specific actions, where appropriate.

Cooperation with the SFO can involve self-reporting, transparency and assisting in investigations. For example, companies may choose to self-report misconduct to demonstrate a commitment to resolving issues and improving compliance. This can influence the SFO’s decision to pursue a DPA, which requires the company to show willingness to cooperate, including facilitating further investigations and taking remedial actions. The timing of such cooperation is critical, as early engagement with the SFO may provide strategic advantages, such as influencing the scope of the investigation or mitigating its impact on the business.

At the same time, companies and individuals are entitled to contest specific actions by the SFO, such as the execution of search warrants. It is advisable to verify the validity of search warrants and the statutory powers under which they are issued. Ensuring that proper procedures are followed during searches, such as obtaining receipts for seized items and retaining copies of documentation, is essential. Legal advice should be sought promptly to address any procedural irregularities or to challenge the scope of the warrant if necessary.

This dual approach reflects the need to balance cooperation with protecting the company’s rights and interests during an investigation. While cooperation can foster goodwill and potentially lead to favourable outcomes, contesting improper actions ensures that the investigation remains fair and within legal bounds.

1. The SFO Statement of Principle
2. [1998] 1 BCLC 362
3. [2021] UKSC 2
4. [2018] EWHC 2024 (Admin)
5. SFO Cooperation Guidance