This blog post was first published by Money Laundering Bulletin on May 11, 2022.
Following recent media reports of raids conducted by the UK National Crime Agency (NCA) - including at domestic residences - as part of a Covid-linked fraud investigation, and visits by the UK Serious Fraud Office (SFO) to numerous commercial properties as part of a fraudulent trading and money laundering investigation, this article highlights some of the key practical and legal matters that companies and individuals should have front of mind in the event of an unannounced visit by a UK law enforcement agency.
A wide variety of UK investigating authorities can apply, without notice, for warrants authorising the authority to enter, search for and seize documentation relevant to its investigation. These include the police, the Financial Conduct Authority, the Competition and Markets Authority, HM Revenue & Customs, the Information Commissioner’s Office and the Health and Safety Executive, as well as the NCA and the SFO.
Unannounced visits, often by significant numbers of investigating officers bearing a court-issued warrant, are unavoidably stressful events. With expert guidance and some forward planning, however, the potential adverse impact of such a visit can be mitigated so that the company or individual’s legal interests are properly protected, their legal obligations are discharged and disruption to ongoing commercial or domestic life is minimised.
A number of critical strategic decisions that can have a lasting impact on the shape and outcome of an investigation must be taken at speed during a raid:
- Should the investigating authority be permitted or refused access to the premises?
- Should a defective warrant be challenged and how?
- Should requested documents be disclosed or withheld?
- How should legally privileged material be dealt with?
- How should questions that are asked of, and interviews conducted with, staff members during the raid be handled?
All this bearing in mind that if an individual resists or intentionally obstructs the investigating authority during the exercise of the powers granted by the warrant, they may be guilty of a criminal offence and any attempt to destroy or hide documents may amount to a separate criminal offence of perverting the course of justice.
The following is intended as a non-exhaustive guide to some of the key steps that should be included in a company or individual’s toolkit for responding effectively to a raid.
Arrival of investigating officers
- The first point of contact of any raid is likely to be a security guard and / or a receptionist. They should be properly briefed to ask the officers for their names and the name of their investigating authority, politely escort them to a meeting room and immediately notify the company’s General Counsel and external counsel of their arrival. Refusing entry could be a criminal offence. Reasonable and proportionate force may be used by the investigating authorities where necessary to enter the premises.
- Either the General Counsel or external counsel should speak with the officer in charge of the search and ask whether they are willing to wait for the arrival of the external lawyers before commencing the search. Experience suggests that most officers will be willing to wait for a reasonable period if appropriate reassurances around entry to the premises and non-interference with materials are provided.
- Note down and where possible take copies of the inspectors’ identification, contact details and the names of their supervisors. The purpose of the raid and the evidence to be searched for should be confirmed.
- The tone to be adopted in dealings with the investigating authority throughout the raid is one of authoritative, robust politeness.
- A copy of the warrant should be taken and immediately emailed to external counsel. The warrant must be carefully examined. Material deficiencies in the warrant can and should be challenged. Battling with the investigating authority over minor deficiencies which can be easily remedied, however, achieves little other than to undermine the relationship with the investigating authority which is crucial in achieving a properly managed raid that minimises the harm done to the target company or individual.
- Set up a control room and compile a team, including IT support, to manage the raid. Team members should be assigned to shadow each investigating officer at all times whilst on site. Written records should be kept of all documents examined by the officers, which rooms are searched, who the officers speak to and what they say. Consider sending non-essential staff members home.
- Many of the relevant documents will be protected by legal professional privilege. Privileged material is protected from seizure. External counsel should assist in identifying privileged material. Where privilege claims are disputed by the investigating officer, it is best to compromise and place the material in sealed (‘blue’) bags separate from the other seized material ready for subsequent independent review to determine its status.
- Staff members should be advised not to engage in casual conversations with the investigating officers. Officers may ask persons on the premises basic questions that are necessary for furthering the proper and effective conduct of the search without a caution being administered. As a general matter, no one may be required to answer questions that go further than this during the search. But questioning that goes beyond the basics such as ‘where is the server room?’ or ‘what is the code for the lock?’ may constitute an interview and be governed by strict statutory codes. In such instances the officers should explain whether the individual is being interviewed as a witness or a suspect. If necessary, a caution should be administered, and independent legal representation found for the individual. A careful note should be taken of all questions asked and answers provided.
Communications / media
- Managing internal and external communications during and after a raid are essential to mitigating its potential adverse impact. A clear communications strategy should be in place well before a raid. Media coverage should be monitored for breaking stories of the raid. Listed and / or regulated companies with duties of candour to the market and / or regulators, must carefully manage the external response to avoid misleading or incomplete statements being made.
Before the inspectors leave
- Meet with the investigating officers before they leave to identify any outstanding issues that need to be dealt with and whether they will be returning. A copy of the officers’ schedule of seized documents should be requested.
After the inspectors leave
- Organise a de-brief with the raid team. Each member team should prepare a written note of the day’s events so that an accurate summary can be provided to senior management. Seized material should be reviewed with a view to notifying the investigating authority of any privileged parts.
In much the same way that businesses do not expect a fire to break out but have a careful plan in place to respond to one should it happen and regularly conduct fire drills, having an up-to-date raid response plan and conducting periodic raid training should form part of a prudent company’s compliance policies and procedures. Even with a detailed plan in place, the most important step for any company or individual to take once a raid is in progress is to immediately seek the advice of expert external counsel with experience of handling similar situations.