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The Serious Fraud Office Compared With its US Equivalent

Author: Zulfi Meerza  5 May 2023
5 min read

What is the SFO?

The Serious Fraud Office (SFO) is the agency that both investigates and prosecutes serious or complex fraud and bribery and corruption. While many countries investigate such offences, not many have agencies specifically dedicated to such crimes.

What is the SFO’s US Equivalent?

The agency that is arguably the most similar to the SFO is the United States’ Department of Justice (DOJ). But while these agencies are alike and face the same challenges, there are differences. This article summarises those differences.

The SFO and DOJ Compared

Both the SFO and DOJ require genuine cooperation from those investigated for any leniency to be granted. But while the SFO and DOJ look to hold individuals and companies to account for wrongdoing, they do not do this in an identical way. Some of the major differences are:

  • Powers.
  • DPAs and NPAs.
  • Self-reporting.
  • Privilege.
  • Interviews.
  • Monitoring.
  • Success.
  • Jurisdiction.
  • Plea Deals


Powers

The DOJ can use a number of tools such as wiretaps, informants and cooperating witnesses and will usually conduct investigations through federal law enforcement agencies.

The SFO generally relies on Section 2 of the Criminal Justice Act 1987 (CJA) to compel persons or organisations believed to have relevant information to answer questions or provide information for any matter relevant to the investigation and produce and explain relevant documents. In May 2024, the SFO Director Nick Ephgrave told the House of Commons’ Justice Committee that the UK should pay whistleblowers for providing evidence of wrongdoing. He said payment should be made from any corporate settlement they help bring about, to compensate them for the risk of coming forward.

The SFO can also obtain warrants from a court to enter and search premises and take possession of documents or other materials relevant to its investigation. Like the DOJ, the SFO can enlist support from the police in conducting its investigations.


DPAs and NPAs

If wrongdoing has been identified (or at least suspected), the SFO can conclude a deferred prosecution agreement (DPA) with that company. This involves the company acknowledging wrongdoing and agreeing to meet certain conditions in order to avoid prosecution.

If it keeps meeting those conditions, the company is not prosecuted for the wrongdoing. But if it fails to meet any of the DPA conditions, the prosecution will potentially go ahead. The US non-prosecution agreement (NPA) is similar to a DPA. But while a DPA has to be approved by a judge in court proceedings, an NPA can be concluded without court approval and can be kept private.
Additionally, unlike with the SFO, an NPA can be concluded with an individual as well as a company.

Self-reporting

The DOJ and SFO both encourage companies to come to them and report any known or suspected wrongdoing - the practice known as self-reporting. But unlike the DOJ, the SFO generally requires companies to self-report the wrongdoing before the SFO has found out about it from other sources.

The DOJ only requires the self-reporting to be done in a “timely’’ way and before the company is confronted with the same information by the authorities. Reporting to the SFO, therefore, is arguably more urgent than a similar situation would be involving the DOJ.

The SFO tends to give those who self-report little or no credit for doing so if it has already received the same information from a whistleblower or from another agency in the UK or abroad.

Privilege

Privilege is the legal protection that certain documents have. If a document is classed as privileged, generally nobody can be forced to produce it for a court or prosecuting agency. There are two types of privilege.

Legal advice privilege covers confidential communication between a lawyer and their client. Litigation privilege protects communication between clients or their lawyers and third parties that has been made for the purpose of obtaining information or advice in connection with current or planned legal action.

In the US, the DOJ tends not to seek documents that are privileged. It is not necessary for a company to waive the protection of privilege for its documents in order for the DOJ to view it as cooperating with an investigation.

The SFO has also stated that it will not penalise a company for not waiving privilege, although doing so does not attain the corresponding factor against prosecution that is found in the DPA code. The SFO has been far more aggressive than the DOJ in challenging the limits of what documents can be considered privileged.


Interviews

If a UK company begins its own investigation into suspected wrongdoing, the SFO will expect to be consulted and may give directions regarding who should be interviewed, the order and timing of interviews and even who should do the interviewing. The DOJ, however, does not insist on such close involvement in an internal investigation.

Evidence: The SFO is also more specific than the DOJ when it comes to how data and other potential evidence should be collected. While the DOJ is prepared to let a company’s lawyers carry out this task (providing it is done appropriately), the SFO may insist on this being done in a particular way.

The SFO also puts more emphasis on preserving a situation so it can conduct its own investigation, whereas the DOJ is happy to let a company conduct an internal investigation after it has self-reported.


Monitoring

An investigation may lead to the need to monitor a company. For example, if a DPA is concluded between the SFO and a company, monitoring may be necessary to ensure the company is meeting the conditions of the DPA.

A company’s compliance programme is a common subject of monitoring, as the enforcement agencies want to ensure there is no potential for the problems to be repeated. Yet the SFO tends to be less likely than the DOJ to use monitors to ensure a company’s compliance programme is fit for purpose. The DOJ tends to put more emphasis on monitoring than the SFO.

Successes

Comparing UK bribery prosecutions under the Bribery Act 2010 with those by US prosecutors under its equivalent, the Foreign Corrupt Practices Act (FCPA), shows greater success for the US. The SFO does not bring many bribery prosecutions and, as a result, it does not achieve many convictions.

Many of its bribery cases have resulted in DPAs rather than prosecutions. Even allowing for how much bigger the US is than the UK, the DOJ – like many US enforcement agencies – benefits from a greater level of funding than the SFO.

The SFO’s strategy for 2024-29 shows a strong focus on technology and highlights the importance of multi-disciplinary investigation teams in successfully tackling the most complex financial crime. It includes a plan designed to retain and attract highly skilled people, such as lawyers, forensic accountants and investigators.

The strategy states that the SFO must “find ways to obtain evidence more quickly and build compelling cases in shorter timescales”; including the possibility of incentives for whistleblowers. The strategy also says that artificial intelligence (AI) and machine learning could help speed up cases and refers to making a renewed push for a disclosure regime fit for today’s casework challenges.


Jurisdiction

The DOJ, like other US prosecutors, is more proactive than the SFO when it comes to pursuing foreign companies operating within its borders. It also tends to be more willing than the SFO to take an expansive view of its jurisdictional reach. This means it is less reluctant than the SFO to take action in other countries if it believes the alleged wrongdoing has a link to its own country.

This was shown when the DOJ took action against 30 individuals involved in the FIFA bribery scandal. That began with a dawn raid in Switzerland, where FIFA is based, and involved individuals and organisations around the world. In that case, US prosecutors argued that business meetings had been conducted in the US and that the US financial system had been affected.


Plea Deals

Sentencing in the US for economic crime is much more severe than in other countries. This gives agencies such as the DOJ the chance to persuade those under investigation to “do a deal’’ to avoid the harshest penalties.

As a result, the DOJ has greater flexibility in how it can deal with suspects than the SFO. Even allowing for the US being much bigger than the UK, statistics show that the US brings charges and fines companies at a far higher rate than the UK does.

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Zulfi Meerza

Senior Associate Solicitor

zulfi.meerza@rahmanravelli.co.uk
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Zulfi’s in-depth expertise in business crime investigations and serious regulatory matters makes him a logical choice to advise and represent corporates, board members, senior business figures and high net worth individuals throughout the life of a case.

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