Swiss bank ordered by Employment Appeal Tribunal to provide documents to newspaper group

By Mitchell Skilling

Guardian News & Media Ltd had sought the documents, as referred to in the original ET judgment, from EFG Private Bank Ltd, shortly after a copy of the judgment had been sent to the parties. The original ET judgment refusing an application brought by employee Dmitri Rozanov was made in October 2018.

The appeal was heard by Judge James Taylor sitting on the Employment Appeal Tribunal. Greg Callus appeared for the appellant and James Goudie QC for the respondent EFG. No representations were made on behalf of Mr Rozanov.

Open justice

Mr Rozanov, the original claimant, had been employed by EFG as a UK market coordinator for Russia, Eastern Europe, and the CIS countries. He brought proceedings in the ET claiming he had been subject to detriment by his employer, and subsequently unfairly dismissed, on the grounds that he had made protected disclosures. While the ET accepted that most of the disclosures that he had made were protected, it did not accept that they were the reason for his dismissal.

The hearing was attended by journalists, although none from the appellant appeared, with copies of witness statements provided for inspection during the hearing. On 23 November 2018, an employee of the appellant wrote to the ET requesting documents from the hearing for reasons of public interest, including evidence that EFG had deliberately colluded with high-risk clients and politically-exposed persons, as well as journalistic reasons.

EFG objected to the application by letter dated 10 December 2018 and asserted that the tribunal did not have the power to make such an order. In a decision of 9 January 2020, the ET held that the requested documents would not be provided to the appellant, reasoning that in the circumstances it would be against the principle of open justice to do so.

Counsel for the appellant submitted that the tribunal had failed to properly define the scope of the open justice principle, and that its evaluation of the balance between open justice and the countervailing factors in this case was clearly wrong. The respondent relied on the ET’s reasoning and further submitted that the documents sought lawfully engaged the Article 8 ECHR rights of the individuals identified in them.

Fundamentally flawed

In his decision, Judge Taylor observed: “There is an important distinction between the public interest in the open justice principle and any specific public interest in the subject matter of the case being determined; they are different things. It is in the public interest that proceedings be conducted in public whether or not the subject matter of the proceedings raises any matter of public interest. The public need to be able to see that justice is being properly administered even in the most mundane of cases.”

He continued: “Just as in the case of members of the public there are ‘purely practical reasons’ why the press cannot attend every hearing, or attend every day of a lengthy hearing. The press have an important role in reporting the judgments of courts and tribunals. It is in the public interest that they have the necessary information to be able to do so fairly and accurately.”

Addressing the ET’s treatment of the open justice principle, he said: “I consider that the employment tribunal’s conclusion that the open justice principle was not strongly engaged was fundamentally flawed because the employment tribunal focused only on the reasons GNM gave for contending that the subject matter of proceedings raised matters of public importance and did not consider the other reasons that GNM relied upon, which it described as journalistic reasons, to explain why they wished to obtain the documentation.”

He went on to say: “Far from this being a case in which the principal of open justice was not strongly engaged, the converse was the case. GNM set out proper journalistic reasons for seeking provision of the documentation. The public interest in the underlying subject matter of the proceedings was something that should also have weighed in favour of granting the application.”

Judge Taylor concluded: “If necessary I would say [the decision was] plainly wrong, and go so far as to find it was perverse in the sense of it being a decision that no reasonable tribunal could have reached in the circumstances of this case on a proper direction of law. This is an unusual case in which any Article 8 or confidentiality issues had been dealt with by redaction and by the Rule 50 Order. GNM, have chosen not to appeal the Rule 50 order or to seek unredacted documents and have wisely limited their application for redacted documents to those referred to in the judgment.”

The appeal was therefore allowed, and the respondent was ordered to provide the requested documents.

Alan Cook: Scope of new land interests register should be reviewed

Certain categories of property owners in Scotland who do not make the actual decisions about what happens to their land will, from 1 April, be required to enter in a Register of Controlled Interests (RCI) the details of the actual decision-maker. This includes non-UK entities which own property in Scotland.

The purpose of the new register is to improve transparency about land ownership by making information about those who have a controlling interest in land publicly available – those who ultimately make decisions about the management or use of land, even if they are not necessarily registered as the owner of the land.

The transition period between the introduction of the register and full enforcement being imposed is one year, so as of 1 April 2023, landowners or longstanding tenants will become liable for criminal sanctions for non-compliance with the RCI reporting requirements.

Failure on the part of the recorded owner or tenant to comply with the duty to disclose information, or the provision of false or misleading information, will be a criminal offence with the penalty being a fine of up to £5,000.

The Scottish government had previously committed to reviewing the RCI once the UK government finally introduced its long-trailed Register of Overseas Entities (ROE). The ROE has now been introduced as part of the new Economic Crime (Transparency and Enforcement) Act which has recently been passed by the UK Parliament.

In order to avoid any duplication in reporting requirements the Scottish government should look to remove non-UK entities from the scope of the RCI.

It is now incumbent on the Scottish government to undertake that review and make those changes to the RCI, ideally before criminal sanctions for non-compliance with the RCI reporting requirements kick in next year.

The Scottish government is now in a position to cut the regulatory burden on those investing in Scotland by undertaking, in the light of the introduction of the ROE, their previously promised review of the scope of the RCI.

As to the RCI itself, the Scottish government said in an explanatory document published in December 2020 that the introduction of the RCI, together with other transparency regimes, would make it possible to “look behind every category of entity in Scotland, including overseas entities and trusts, to see who controls land”.

The RCI will be maintained by the Registers of Scotland and will be free to access. Affected property owners, or affected tenants under leases of more than 20 years, will have to submit the details of the land, their own details, and the details of those with significant influence or control over the owner or tenant.

More detailed guidance on how to make an entry in the register, and when entries can be made, is expected shortly.

Alan Cook is a partner and property law expert at Pinsent Masons

Gordon Brown calls for new International Anti-Corruption Court to punish Putin

Writing in The Times today, Mr Brown said Vladimir Putin should be brought to justice for his “looting of Russia’s resources” in addition to his crimes of aggression.

He says: “Putin acts without fear of consequences because historically he has not faced them. His control over the police and prosecutors including the courts prevents Russian law from being enforced.

“But until now he has also been able to act with impunity because in the world’s financial centres including London bankers, accountants, lawyers, estate agents and PR advisers, who, knowing perfectly well they are covering up crimes, have been willing to use every loophole in domestic and international law to offer his cabal safe havens.”

The new court would “intervene where domestic law has not or cannot act against misappropriation of a country’s wealth, and to punish, deter and diminish corruption whenever a nation fails to enforce their own criminal laws against corrupt leaders”.

Mr Brown writes that proof that Russia is a kleptocracy was revealed in the Panama and Pandora papers and that it is believed that rich Russians in Mr Putin’s inner circle have moved at least half of their wealth out the country through “companies registered in the Channel Islands, British Virgin Islands or other UK dependent territories”.

He concludes: “In our divided fractured protectionist world an IACC may be seen as an unrealisable dream and some may call it a fool’s errand, but in recent years, against the odds, pioneering leaders have made what was dismissed as impossible possible — repairing the ozone layer in the 1980s, creating a joint US-Russian international space station in the 1990s, writing off African debt after 2000, and banning land mines and negotiating the Paris climate change treaty in the first two decades of this still-young century — and, despite the rise of nationalism, protectionism and great power competition, we have been able to create an International Criminal Court to punish war criminals.”

Experts to consider ways to promote peaceful assemblies

The short life working group brings together experts on marches, human rights, community engagement and mediation.

It follows a commitment made in September last year to look at the issue after raised community tensions following sectarian, racist and anti-Catholic incidents.

Members will consider whether other models used to regulate marches and parades - including the Parades Commission in Northern Ireland - can be adapted and applied to Scotland.

A report of initial findings will be provided in the summer.

Justice Secretary Keith Brown said: “The right to peacefully march and parade is fundamental to all democracies, but the right to march must be balanced with the rights of communities to go about their business undisturbed.

“We are determined to achieve that balance and are open to considering all options which will help to ensure that such a balance is struck.

“The findings of the expert working group will help us as we make progress on this important issue.”

Chair of the working group Professor Dominic Bryan said: “We are pleased to have the opportunity to review marches and parades in Scotland and the mechanisms that balance the rights of marchers and the communities impacted by marches.”

Which?: Young people most likely to report being scammed amid dramatic rise in fraud

Which?’s analysis found that between November 2020 and December 2021, individual victims lodged a total of 448,838 fraud reports with Action Fraud. More than £1.9 billion was lost by victims as a result.

A recent Office for National Statistics (ONS) report also revealed that an estimated 5.1 million fraud offences were committed in England and Wales in the year to September 2021 – up 36 per cent in two years. It means that fraud now accounts for 40 per cent of all crimes recorded.

It is often assumed that older people are more vulnerable to fraud, but Which? found that those aged 20 to 39 were the most likely to report being scammed – accounting for two in five (39 per cent) of all reports to Action Fraud.

Which? identified 12 emerging fraud threats and found that three quarters (74 per cent) of rental fraud cases were reported by young people (20-39). This is where victims are tricked into paying upfront fees to secure properties by fake landlords and letting agents.

Jonny Yeoman, 27, told Which? he was conned out of £2,500 after being tricked into paying a deposit to a fake landlord to secure a rental property.

The victim saw the flat advertised on Gumtree with a link to SpareRoom, and received a message from who he thought was the landlord. The scammer then convinced Jonny to set up a viewing at the property with legitimate estate agents.

After viewing the flat, Jonny checked the Land Registry to verify the property landlord’s name and decided to put down a deposit. But when he tried to move in, the real landlord’s daughter answered the door and said they had no knowledge of the rental agreement and realised the landlord’s email was fake.

The victim reported the scam to Action Fraud and the recipient bank of the deposit, which was able to recover almost all of the money lost.

Those aged between 20 and 39 were also more likely to report pyramid or Ponzi schemes (57 per cent) and online shopping scams (55 per cent) than other age groups.

Meanwhile, people aged 60 to 79 made up one in five (20 per cent) of all fraud reports. This age group makes up the highest proportion of reports for computer fixing fraud (47 per cent), recovery fraud (38 per cent), and ‘419’ advance fee fraud (37 per cent).

Online shopping scams and auction fraud were easily the most reported type of fraud overall, where victims pay for goods on an online marketplace that do not arrive, or do not receive payments for goods they have sold. These scams make up a quarter (23 per cent) of reports.

Investment fraud is responsible for the biggest losses, with the average victim losing more than £50,400 to pyramid or Ponzi schemes – reports were up 59 per cent on last year according to the ONS. These scams involve recruiting friends or family (pyramid) or paying returns to early investors to gain credibility (Ponzi).

Victims also lost £25,000 on average to share sales or boiler room scams (reports up 57 per cent), and £24,000 to other investment scams such as cryptocurrency (reports up 34 per cent). Action Fraud told Which? that it received 9,458 reports referring to cryptocurrency in 2021, with total losses of £204.5 million, or £21,620 per report.

Many scams originate online via phishing emails or rogue adverts on search engines and social media, directing you to fake investment comparison websites or websites cloning regulated firms.

Sham investment firms often pretend to be backed by celebrities or social media ‘influencers’ and will even create fake news articles that appear to endorse them.

While the UK is facing a fraud crisis, the government has finally taken action to tackle online scam adverts. After years of Which? campaigning, the government recently announced that it would include paid-for advertising in the Online Safety Bill to help tackle an epidemic of scams gripping society.

The Bill must now ensure that the regulator has the support and resources it needs to hold companies to account and take strong enforcement action where necessary, so that fraudsters are prevented from using adverts to lure unsuspecting victims.

Five years on from Which?’s super-complaint on bank transfer scams, the government also committed to legislate so it will be mandatory for firms to reimburse victims.

The consumer champion is urging the government to swiftly introduce the right legislation on bank transfer fraud, as Which? has repeatedly found evidence of unfair and inconsistent treatment of victims despite the introduction of a voluntary bank code designed to protect them.

Jenny Ross, Which? money editor, said: “Fraudsters don’t discriminate when it comes to scams and everyone is susceptible to these growing numbers of crimes, with many young victims being tricked into losing life-changing sums of money.

“The government’s decision to include paid-for scam adverts in the Online Safety Bill, along with promises to make reimbursement mandatory for bank transfer scam victims was a huge step in the right direction, but it’s now up to the government and regulators to get it right.

“We will be checking carefully that the Online Safety Bill goes far enough in protecting consumers from fake and fraudulent adverts, and it’s vital that the government swiftly introduces the right legislation for bank transfer fraud that will ensure victims get fair and consistent treatment.”

New co-chairs appointed to help fulfil Scottish government’s gender goals

Talat Yaqoob, co-founder of Women 5050, the national campaign for fair representation of women in politics and public life and Anna Ritchie Allan, executive director of Close the Gap have been appointed to co-chair the next phase of the First Minister’s National Advisory Council for Women and Girls (NACWG).

First Minister Nicola Sturgeon said: “I look forward to working with Talat and Anna on the challenges they set for us in phase two to build on the dynamic recommendations made by the Advisory Council in phase one and to further our work to tackle gender inequality in every aspect of life, in every corner of Scotland.”

Ms Yaqoob said: “Having been part of the Advisory Council since its inception, I know that the recommendations made were done so with the genuine intention to improve the lives of women and girls in Scotland. With the content of all three annual reports accepted and supported, it’s now time to ensure these changes are put into action to make this intention into a reality. Without this, they are just hopeful words on paper.

“Over Phase Two, we’ll be focusing on two things, accountability and participation. We will be challenging Government and beyond to deliver these recommendations effectively and pushing for the needs of marginalised women to be at the centre of design and implementation.”

Ms Ritchie Allan added: “The NACWG recommendations are bold and wide-ranging, and accountability is necessary to drive systemic change. The work comes at a critical time, as Covid-19 has magnified women’s and girls’ inequality. The accountability phase creates an opportunity to do things differently, to ensure that the Scottish Government delivers on its commitments around gender equality. Our recommendations are a starting point for change, but effective implementation is needed if change is to be meaningful for marginalised women and girls.”

Daily executions in Saudi Arabia continue in run-up to Grand Prix

Eight of those executions took place this week, including two executions on Wednesday, only two days before F1 practice sessions begin.

On average, Saudi Arabia is executing more than one person per day. If it continues to carry out executions at its current rate, there will be nearly 500 executions this year. This would far exceed the highest recorded number of executions, which was 186 in 2019. Already in 2022 Saudi Arabia has executed 108 people, which is more people than in 2020 and 2021 combined.

Nearly three-quarters of the 81 men killed in the mass execution were accused of non-lethal offences and, as confirmed by the United Nations’ High Commissioner for Human Rights, more than half were killed for taking part in pro-democracy protests.

Maya Foa, director of Reprieve, said: “Formula One boss Stefano Domenicali says Saudi Arabia is headed in ‘the right direction’ when the Kingdom is on track to execute almost 500 people this year. There have been executions almost every day in the lead-up the race – they have clearly heard the message from the sport’s organisers that there will be no consequences. The ten year deal F1 has just signed with Saudi Arabia is effectively a contract to sportswash the blood stains from Mohammed bin Salman’s regime.”

Lord Hain, co-chair of the Motorsport APPG and vice-chair of the Formula One APPG, said: “The mass execution of 81 men In Saudi Arabia, over half of whom were pro-democracy protestors, serves as a harrowing reminder of the human rights abuses suffered by the Saudi Arabian people.

“Formula One cannot be used to legitimate such atrocities. If the Jeddah race is to go ahead, it must be a venue to strongly condemn Mohammed bin Salman’s regime, and all participants - drivers, officials, corporate sponsors - must loudly call for the Kingdom to place a moratorium on the death penalty, in line with Formula One’s core values.”

Rights watch

Human rights advocates urge UN rights chief to visit Tibet

Excluding region would make report on China’s rights violations ‘incomplete,’ Tibet Bureau says.

Karuna Nundy: India Has a Strong Constitution, but Its Democracy Is Weakening

India’s constitution guarantees the rights to have a good life, vote, and speak freely, but these are not always respected, leading to an erosion of democracy.

Court in Japan rejects claim by people lured to North Korea ‘paradise on Earth’

A Tokyo court has rejected a lawsuit filed by five people seeking compensation from North Korea for what they said was decades of abuse after they were lured there by Pyongyang’s false promise of living in the “paradise on Earth”.

The U.S. Has Recognized Myanmar’s Genocide. But Is That Enough?

The United States formally declared this week that the atrocities and ethnic violence Myanmar’s military has committed against the country’s Rohingya minority constitute a “genocide,” following a yearslong campaign by advocates of the minority group and global human rights organizations urging the United States to do so.

Egyptian council holds first ever meeting with human rights, civil society leaders

For the first time, Egypt’s state National Council for Human Rights met with independent human rights organizations, which have long been accused by the government of colluding with Western parties.

Security, Soft Power and Regime Support: Spheres of Russian Influence in Africa

The Russian invasion of Ukraine has highlighted the extent to which Vladimir Putin is prepared to go to assert his view of Russia’s interests beyond the country’s borders. As the world focuses on Russia’s latest aggression in Europe, Western nations must not lose sight of the broader strategic confrontation that has re-emerged with Russia in recent years across Africa.

Violence in Mexico and Central America driving large waves of migration

Waves of migration through Mexico and Central America, and people who go missing, will increase in 2022 due to high levels of violence in the region, the International Committee of the Red Cross (ICRC) said.

France probes Interpol president for alleged torture, barbarism

Paris (AFP) – French anti-terror prosecutors have opened a preliminary inquiry into torture and acts of barbarism allegedly committed by Emirati General Ahmed Nasser Al-Raisi who in November became president of Interpol, judicial sources said on Thursday.

Germany goes on a mission to secure supplies of Qatari gas

Germany’s Vice-Chancellor Robert Habeck visited Qatar over the weekend in a bid to secure alternatives to Russian gas supplies, with little chance of immediate success in a country seen with suspicion in Germany for its human rights violations.

Sweden sparks ire of environmentalists with mining decision

The Swedish government has decided to grant the exploitation of the Scandinavian country’s largest unexploited iron ore deposits to a Sweden-based company, sparking the ire of environmentalists.

Quote of the day

The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.

Isaac Asimov

And finally… Yeezy money and take a bow

Officers in Portland, Oregon, said they found the stolen van on Sunday.

The trainers are estimated to have a value of more than $250,000.

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A man has been arrested for allegedly stealing a crossbow by stuffing it down his trousers in Florida.

Darren Durrant, 46, was spotted on CCTV last month at a True Value Store.

He is seen walking into the shop with a crutch before removing the security tag from the weapon with cutting tools.

He then puts it down his trousers before leaving, without being caught.

Why New Business Teams are catching on

Jose Mourinho famously said, “Good teams win titles, but great teams retain them”. Makes sense. And acquisition and retention, albeit in the form of clients, is definitely something we are seeing more law firms focusing on in 2022.

If it’s not broken, don’t fix it…?

It is far more complicated for champions to strengthen their side than it is for their rivals. Winning the league is a veil; it means that even a flawed team has a legitimacy, that even those players whom a manager believes might be improved upon most easily have a right to keep their place. Football has always believed that you do not change a winning formula, that if something is not broken, you do not fix it, even when actually it might be rather more broken than it first appears.

The same can be said for law firms. Firms sometimes don’t know there are better ways to work. They do quite well, they’re bringing in fees, so all is well. But not adapting to a changing environment can be costly. And as much as many lawyers and law firms have formed great relationships and in many cases friendships, the desire of your rivals is to win, to do better, to catch and overhaul the firm that did better than them the previous year. That is a powerful emotional impulse, particularly when combined with a freedom to change their working practices to address their problems.

A taste for success

Great football managers often talk about a hunger for trophies. Brian Clough always said that the most important triumph in his time at Nottingham Forest was not the league title or the European Cup, but the 1977 Anglo-Scottish Cup, because that was the one that set the team on the way to further glory, which included two European Cups. That first gave them a taste for success. This is called the “Champagne Effect.”

For law firms to change and succeed can be difficult. Mainly because as friendly as you might be with the firm at the opposite end of the High St, you really don’t know what they’re up to internally. You don’t know what they’re planning, the trends they are following or the work the backroom staff are doing to get their team ready to not just compete, but to potentially take the title! But what you can do is create small wins to give you that taste for success.

Structured success

Many of the law firms we speak to are gearing up and restructuring their business for a busy year. One even used the term, “Its Game On!”, hence the title of this article. The trend we’re seeing is that the introduction and/or expansion of ‘New Business Teams’ (NBTs) are going to be business critical for law firms.

We’ve heard so many law firms talking about this, and many are now adopting a dedicated New Business Team to enhance and structure their sales processes. Primarily because the importance of tracking the marketing spend and conversion values can’t be underestimated in today’s market. Firms are becoming laser focused on not only driving new business but improving comms and analysing their client data to ensure they retain them.

Change your tactics

The general rule that successful firms are following is that if the cost of client acquisition is too expensive for the work the client is paying you for then it’s time to change tactics.

The trouble with law firms is they are normally hired for a one off piece of work for a client and struggle to sell other services to enhance the income stream they worked hard to sign up. The enthusiasm to try and structure this process and retain business weans because most firms are busy and believe they don’t have the time. This may be true, but the amount of money being lost and the likelihood of you falling way down the law firm league table because you don’t focus on this growth area is going to make our break the long term success of your business.

Here are 3 key areas you need to consider to succeed in the NBT challenge:

1. Methodology and Process – how to do it within the context of your work types, legal knowledge and customers.
2. People and Organisation – are you structured in the right way for success, with the right people owning the right things?
3. Systems and Resources – using the right tech and resources is critical, and ensuring your software includes a dedicated way to Intake, Track & Convert enquires easily.

Denovo’s “Champagne Effect”

It’s a law firm leaders’ job to teach their team to be hungry for success. It’s Denovo’s job to give your team the “The Champaign Effect”. In other words, we’ll show you how using the right technology to manage new business and retain existing clients will help your law firm be successful. Coupled with great people and a structured process we’ll give you the efficiency and data you need to see success. We’ll give you some wins.

If you’re ready to change your tactics, visit denovobi.com, call us on 0141 331 5290, or if you would prefer to write to us our email is info@denovobi.com.

Scotland’s only independent provider of commercial dispute resolution funding marks 10 year anniversary

As Restitution marks its tenth anniversary, it reflects upon the market and how its business model has evolved.

• The need for commercial third party funding in Scotland has grown considerably in the last 10 years
• The number of cases reaching court are reported to be around 10,000 less than 10 years ago
• The economic impact of coronavirus and the attack on Ukraine will be far-reaching - one of the specific consequences is a likely rise in the number of legal disputes resulting from the disruption to businesses and individuals

Restitution offers commercial, insolvency litigation, mediation, arbitration and adjudication funding, setting itself apart in the market. Since being formed in 2012, the company has gone from strength to strength within the dispute resolution funding market and has become much busier in recent years as the market has matured and welcomed the value of its offering.

Frances Sim WS, General Counsel for Restitution Ltd, states the need for commercial third party funding in Scotland has grown considerably in the last 10 years.

“If a claim is meritorious, with strong prospects of success and a good route to recovery from the defender then we will offer funding.  We don’t operate a target driven approach and this works as a business model as we are relatively small and thus only fund cases we believe in.

“The number of cases reaching court are reported to be around 10,000 less than they were when our business was founded. There are many reasons for that, including the very welcome increase in alternative routes including mediation and arbitration. However, even with these alternative processes in place, securing the finance required to pursue a dispute through legal means – including concerns about the possible adverse award of expenses - remains a huge challenge and that’s where we can assist.  

“Third party funding can also provide another means of helping provide access to justice. Third party funders invest in existing or prospective cases – often those which might otherwise not be able to be pursued – to enable their clients to progress their dispute. While this form of support was traditionally suited to larger and more complex claims, its model has changed in recent years. It is now geared for a wider range of claims and is more accessible.

“The economic impact of coronavirus and the attack on Ukraine will be far-reaching and affect businesses across multiple sectors on many different levels. One of the specific consequences is a likely rise in the number of legal disputes resulting from the disruption to businesses and individuals.”

Examples of Restitution funded cases include a case involving a Scottish businesswoman who received a substantial settlement after being systematically excluded from the family business in which she was a director. Without funding the other shareholder’s unjust and underhand behaviour would have gone unchallenged. Another case saw Restitution provide backing for a property developer who fought proceedings brought by a major Scottish bank.

Frances continues: “Our business was way ahead of its time when it first started 10 years ago in terms of our service offering. The whole market has developed and changed in that time within the legal profession, including the introduction of the availability of group proceedings (also known as class actions) and damages based agreements, the reduced scope of civil legal aid and ‘no win, no fee’ arrangements in recent years, all of which our business continues to adapt with.  

“Our offering is structured on a case by case basis and funded by private investors. If the claim is successful the investment is repaid together with an agreed share of the money recovered. The level of funding offered will always be tailored to the requirements of the claim itself, the duration of the case and the budget. If the case is unsuccessful, our investment is not repaid.”

One of the major investment funders working with Restitution is well known Scottish business owner Donald Houston.

Donald said: “Having been told some years ago by a very senior judge that “there is no such thing as justice – only the law – and access to the law is not affordable to most” and, having been in that position myself some years ago, I looked at a way of trying to mitigate this unfortunate reality of the system we find ourselves in.  

“Being able to help genuine cases have a fair hearing and access to justice is extremely rewarding. I, along with others, provide funding for claims that present a good strong case, be it someone who genuinely can’t afford the fees, it might be a distressed situation or one with a balance of equity, so one with good prospects to success will merit a case and a root to recovery.

“It would be great if every genuine case could be heard but at least third party funding is making inroads and helping many cases gain justice.”  

An Act of Economic Warfare? What to expect from the Economic Crime Act

Having been hailed by David Davis as an “economic warfare bill”, the Act is intended to provide the UK with tools to “better identify, investigate and sanction the illicit wealth of those who wish to abuse our open economy”. Expedited to assist worldwide attempts to target Russian wealth, it is of no surprise that the bill was quickly passed with cross party support. One could therefore be forgiven for thinking the proposed powers are newly conceived. However, for much of the Act, that is not the case.

The Act, split into three parts, covers:

1. the creation of a new register of overseas entities;
2. reform of unexplained wealth orders (“UWOs”); and
3. the streamlining of the Sanctions Act

Part One – register of overseas entities

Creation of a new register of overseas entities, requiring overseas companies owning or buying property in the UK to disclose their true owners to Companies House.

It is estimated that approximately £170 billion of UK property is held by overseas entities, however, foreign entities owning such property are not subject to the UK’s Persons with Significant Control (PSC) Register, which came into force for UK companies in 2016. The Act aims to remedy this. Any foreign company selling properties between 28 February 2021 and the full implementation of the register will be required to declare true ownership at the point of sale. For existing ownership, those that acquired land since (a) 1 January 1999 in England and Wales, and (b) since 8 December 2014 in Scotland will also be required to comply. Backed by restrictions on registering or disposing the title of the land until registration has occurred, and sanctions for non-compliance, including fines and custodial sentences of up to five years, the register is intended to assist law enforcement agencies identify and investigate those using UK property to launder money.

Origins

Although appearing to be in direct response to the war in Ukraine and a concerted attack on disguised Russian investment in the UK property market, this proposed register is not a new concept. The Overseas Entities Register was first announced in March 2016, around the same time the PSC Register was introduced. After consultation, a draft Bill was tabled in 2018, but slow progress ensued. Recent events have clearly forced the Government to expedite the legislation.

Early concerns and amendments

Although a welcome move, early concerns have been raised (and in some cases, partially addressed). The bill initially called for daily fines of £500 for non-compliance.   Considering the financial means of the individuals the legislation is intended to target, this was considered by many to be weak. The daily amount has now been set at £500, increasing to a maximum £2,500 per day.  

As the Register will be based on existing PSC requirements, there remains the possibility that companies will be able to hide their true owner by claiming that they have no beneficial owner. This is already a problem with the existing PSC register.

The transitional provisions initially proposed allowed a grace period of 18 months to comply (for existing property ownership), which was reduced to six months after concerns were raised. This continues to allow a reasonable timeframe for disposal, however, the Act now requires sales from 28 February 2021 to be registered at the point of sale. This is a positive move, but will require Companies House to be sufficiently resourced from the get go. As further widespread reform of Companies House is imminent, there are questions over its current capability and capacity to deal with the new register.  

Another change to the bill is the closing of a loophole which would have allowed the Secretary of State the right to exempt individuals from registration on the basis of “the interests of the economic wellbeing of the United Kingdom”. Seen as a widely termed “oligarch loophole”, the removal of the exemption has been widely welcomed.

Outlook

Whilst there are questions over the ability of the register to assist in the waging of economic warfare in the short term, the proposed register is likely to make a significant longer term impact.

Part Two - reform of UWOs

Reform aimed at improving the effectiveness of UWOs, particularly in relation to situations involving complex ownership structures.

Changes include the following:

• the definition of property being expanded to include homes held in trust or by shell companies;
• more time is to be made available to law enforcement to carry out investigations;
• reforms to the cost rules meaning agencies will no longer be liable for respondents’ costs unless they act dishonestly, unreasonably or improperly

Why were reforms needed?

UWOs have been around since January 2018 but have been used only nine times in relation to four cases. The early hopes of a strong weapon to improve civil recovery just haven’t materialised.   This is largely attributable to the costs (and public embarrassment) associated with failed attempts. In one case, the NCA was left with a bill of £1.5m after a UWO used to seize property assets was successfully challenged. Identifying ownership of assets has also often proved difficult.

Another obstacle has been the requirement that an agency proves the respondent did not have legitimate means with which to acquire the asset. When legitimate wealth is also held by a suspect (which it often is), it is difficult to point to a specific asset and categorically state that it was obtained via illegitimate means.  

Outlook

There is a clear political will to make better use of UWOs, and the Act will undoubtedly move some way towards this.

Part three – streamlining of the Sanctions Act

Reform to expedite sanctioning of oligarchs and businesses associated with the Russian Government and strengthen powers to impose monetary penalties on those who violate sanctions.

The Act introduces an urgent designation process to allow the UK to quickly impose sanctions in respect of entities already subject to sanctions by other specified countries (including the US and EU). This process includes the removal of the statutory test of appropriateness for making such designations. There does, however, remain a requirement to show reasonable grounds to suspect that the person to be designated is “an involved person”.

At present the Office of Financial Sanctions Implementation (“OFSI”) can only impose civil monetary penalties for contravention if the individual/institution knew or had reasonable cause to believe that they were breaching sanctions. This requirement has been removed, bringing the UK more in line with civil enforcement powers in the US.  

Potential concerns

Some commentators have expressed concern that the new rules will capture those who make honest mistakes. One industry capable of falling foul is the Fintech banking industry, with many newly established institutions not having sanctions monitoring capabilities in place to meet the new strict liability test.

Outlook

The sanctions proposals are considered significant and a welcome change to what has historically been perceived as a weak record of UK Sanctions enforcement. The Act will make it far easier to impose civil fines for non-compliance with obligations by applying strict liability. It is hoped that this will add teeth to the existing regime which has seen OFSI issue only six fines in the six years since it was created.

Shortly following the Act’s Royal Assent on 15 March, the UK Government announced a further 370 sanctions against Russian and Belarusian entities; 51 of which are believed to be oligarchs and their family members, with an estimated worth of £100bn.

Next Steps

The Act sets out the first set of measures in a wider package of legislative proposals intended to tackle illicit finance. Next to be addressed by Government in the coming months is the long overdue reforming of Companies House and the introduction of powers to seize crypto assets more easily.

Steps taken to tackle and reduce economic crime are certainly welcome, and the effectiveness of the Act will become clearer in due course. We eagerly await the next set of proposals and are interested to see whether these are delivered at such pace.

Emma Webster is a manager in the Forensic Accounting and Investigations team at Quantuma Advisory Limited

emma.webster@quantuma.com

Property Market – A Perfect Storm for Fraudsters?

A report on money laundering activity showed these fears to be well founded, as property fraud was a key theme with £200 Million of criminal activity in 2020.

Many of these cases relate to transactions where a criminal purports to sell a property without the knowledge or consent of the proper legal owner. Where they are successful, a legitimate buyer and their lender can face enormous losses.

Protection against this type of loss is provided by Stewart Title’s Fraud Solution Policy. This policy offers safeguards against losses arising from fraud for buyers and their lenders where a criminal successfully impersonates the owner of a property. Cover of up to £1,000,000 is available for residential properties in England, Wales and Scotland with premiums starting at £28 (inclusive of IPT).

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Policies can be ordered online at: www.stewartsolution.com. Where cover is required for all of a firm’s buyer and lender clients, it is also available as a Block Policy.

For more details, please contact:

John Logan
Country Manager
01698 833308
john.logan@stewart.com

Elizabeth Birrell
Business Development Executive
07940 513681
elizabeth.birrell@stewart.com

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Elizabeth Birrell

07940513681

elizabeth.birrell@stewart.com

www.stewartsolution.com