Quantcast

SFO increasingly demanding more information for fraud investigations into big businesses without going through the courts

0

The Serious Fraud Office (SFO) is increasingly demanding information for investigations from big businesses without going through the courts for approval, says Pinsent Masons, the international law firm.

The number of so-called ‘Section 2’ notices issued by the SFO more than doubled (123%) in the past five years, increasing to 1,032 in 2017/18 from 463 in 2013/14.

Section 2 notices are a way for the SFO to compel the production of documents, electronic data and  information from any individual or business without the need for court approval.

Applying for a search warrant means that the SFO is subject to  judicial oversight whilst a Section 2 notice requires no judicial oversight. Under a Section 2 notice the SFO does not have to explain to a judge or magistrate  in advance of using the power what or who is subject to the investigation, or the reasons that requiring the production of a potentially significant amount of data is necessary, reasonable and proportionate. In contrast, to obtain a search warrant the SFO (and other law enforcement bodies) must persuade a judge that there are reasonable grounds for believing that an offence has been committed and that the warrant is justified and proportionate in the circumstances.

Section 2 powers have also been used increasingly to compel documents from overseas companies instead of going through the traditional route of mutual legal assistance a process which involves judicial oversight.

The SFO may  require a company to produce a large pool of digital data going back over several years and sometimes decades, without any search terms being applied to reduce and focus the data set. However, gathering the correct data properly is extremely time consuming and also requires the assistance of lawyers and forensic technology experts.

The time period given by the SFO for businesses to produce the requested data may be immediately (called a “here and now notice”), although it is usually 7 days and extensions may be granted.

Pinsent Masons says that where the SFO deploys its Section 2 powers against a business it can create severe disruption and expense for that business. The SFO’s own Operational Handbook recognises that Section 2 notices are inherently intrusive and that the powers should only be exercised when it is necessary and reasonable to do so and in a proportionate manner. However, the assessment of what is proportionate rests with the SFO. The recipient of the notice may consider the notice is wholly disproportionate but their only recourse is to apply to the court to do judicially review the SFO which is expensive and not a course many companies would wish to take.

Failing to comply with a Section 2 request is a criminal offence, punishable by up to six months imprisonment, and a further two years if any of the information is false or misleading.




Share.