Cometh Moneyval …cometh another law enforcement mechanism …

Who is involved?

A DPA involves Jersey’s Attorney General (AG) as prosecutor and a legal entity (LE), such as a company, as defendant (DPAs are not available to individuals).  A DPA allows a criminal prosecution to be suspended for a defined period and potentially discontinued, provided the defendant LE meets certain conditions under an agreement between the AG and the LE. The process is subject to supervision and approval by the Royal Court. Compliance by the LE will be monitored by an Independent Monitor (IM). The IM will be nominated for appointment by the AG and approved by Royal Court. The LE will pay the fees of the IM.

What is a DPA?

A DPA is a statutory agreement pursuant to which the LE agrees to comply with the requirements imposed on it by the DPA and the AG agrees not to progress a prosecution in relation to the specified offences for a specified time.

The AG may only proceed with a DPA if the LE has self-reported the commission of the offence and has provided evidence that is reasonably capable of demonstrating the offence. It is currently anticipated that the self-reporting must take place before the LE is under investigation.

The AG is not obliged to enter into DPA negotiations but will consider whether, in the interests of justice, it is appropriate having regard to factors such as: harm and impact; any delay in reporting; previous conduct; and Jersey’s reputation as an International Finance Centre (IFC).

The AG must initially apply to the Royal Court in private for a declaration that entering into the DPA is likely to be in the interests of justice, and that the proposed terms of the DPA are fair, reasonable and proportionate.  If the Court makes the declaration, once the final terms of the DPA are agreed, the AG applies to Court for approval.  If the Court makes the declaration it will normally do so in open Court and the AG must then publish the DPA and the Court’s declaration.  (The Royal Court may also order publication of information in relation to applications regarding suspected breaches of a DPA, or applications to vary the terms, or discontinuance of a DPA.)

Should the LE decide to enter into the DPA and then comply with its terms it will not face prosecution. However, if on the balance of probabilities, it is determined the terms of the DPA have been breached the Royal Court may order the breach is remedied or a prosecution should proceed.

A DPA can only be offered in respect of certain offences. These are offences likely encountered in a corporate context. Examples include: fraud; larceny; insider dealing; failing to prevent money laundering; intermeddling; and bribery and corruption.

The terms of a DPA will vary, depending on the circumstances of the case, but may potentially require the LE to: pay a financial penalty; pay compensation; make charitable donations and undertake remediation.

If the legislation is enacted, the AG will be obliged to publish guidance, which is likely to address a number of important practical issues such as: the process of self-reporting; the principles to be applied in determining whether the evidence submitted is reasonably capable of demonstrating a specific offence has been committed; the process of negotiating a DPA; and the contents of the DPA.

Why DPAs?

The Identification Doctrine[1] is said to be a significant challenge for prosecutors in Britain. It is considered ineffective because it ignores the reality of complex, modern corporate decision making and discriminates against small businesses. The position is said to have been exacerbated by the case of Serious Fraud Office v Barclays where the High Court deemed, on the facts, that neither the CEO nor CFO, both board members, would be considered the directing mind and will of Barclays. By disposing of criminal conduct through a DPA prosecutors do not have to go through the process of satisfying the Identification Doctrine.

The MONEYVAL assessment and particularly Immediate Outcome 7 (IO7) of the FATF methodology means Jersey needs to demonstrate prosecutions that are consistent with its money laundering risk profile as an  IFC and to apply effective and dissuasive sanctions against LEs.

Where can I find out more?

The proposition can be found here: https://statesassembly.gov.je/assemblypropositions/2022/p.103-2022.pdf

When will DPAs be introduced?

DPAs will be debated in the States at the end of 2022 and are likely to be introduced early in 2023.

Oben Comment:

There are a number of similarities between DPAs and entering into a settlement agreement with the JFSC in respect of a civil penalty or other regulatory action.  Both have potential benefits in that they are consensual and allow the LE to mitigate the potentially more damaging consequences of going through the full prosecution/ regulatory enforcement process.  Both will involve some form of adverse publicity, are likely to require some form of remediation, the payment of a financial penalty and the payment of costs to a third party (the IM in the case of a DPA and, usually, a reporting professional in respect of a settlement with the JFSC). Both mechanisms are likely to minimise the ultimate potential sanction and associated reputational damage.

A key differential is, however, that DPAs require the LE to self-report.  Any LE considering self-reporting will need to carefully consider the potential consequences should the AG or the Royal Court consider a DPA to be inappropriate – the material contained in any self-reporting may then be used against the entity in a ‘normal’ prosecution.  Further, the same material may also be used in a ‘normal’ prosecution in the event the LE fails to comply with the terms of the DPA.

Any LE considering reporting itself in expectation of a DPA should also carefully consider any regulatory consequences and how they should be addressed (including connected persons).

When considering any self-reporting LEs should obtain comprehensive, expert legal advice as soon as possible.  Oben Law is consistently ranked in Tier 1 by the Legal 500 in regulatory and white collar crime. Its team of legal and regulatory experts are uniquely placed to assist LEs faced with such issues.

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[1] Currently attributing criminal acts of natural persons to a legal person can only be achieved if such natural persons can be said to represent the directing mind and will of the natural person – the Identification Doctrine.