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One of the many as-yet unanswered questions relating to the UK’s pending departure from the EU is “how will Brexit affect financial crime?”.
The international extradition of fraudulent and white-collar offenders between the UK and EU member states is currently managed through the execution of European Arrest Warrants.
The free judicial movement between EU member states of individuals suspected or convicted of any other serious crimes is also handled using EAWs.
At present, the UK government will be permitted to make use of EAWs throughout any transitional period in the run-up to the currently unconfirmed EU departure date. However, according to Article 185 of the Withdrawal Agreement, EU member states will reserve the right to deny the extradition of their citizens to the UK throughout this period.
This may occur if authorities in the country in question believe that the imprisonment of one of their nationals within the UK will likely infringe upon their rights as an EU citizen. As the EU charter of fundamental rights is unlikely to apply to the UK after Brexit, this may become a relatively common judgement.
So what will become of our approach to international financial crime fighting after the UK leaves the EU?
It’s predicted that one no-deal Brexit effect on financial crime will be that extradition between the EU and the UK will be made up to four times as expensive. Numerous extraditions have already been denied as a result of the UK’s plans to leave the EU. In 2018, the Irish Supreme Court refused to authorise the EAW-assisted extradition of an Irish national, Thomas Joseph O’Connor, to the UK.
His case was instead referred to the European Court of Justice, as Mr O’Connor’s defence successfully argued that the prison sentence their client faced would mean that he would be incarcerated in the UK beyond the Brexit departure date (which, at that time, was scheduled for the 29th March 2019). As a result, it was noted that his rights as an EU citizen were likely to be affected.
DBT & Partners is currently working on two financial crime cases revolving around Brexit and the conditions of the UK’s ongoing partnership with the EU regarding financial crime. The first involves an individual serving a custodial sentence in Italy, against whom authorities in the UK have recently issued proceedings under the Proceeds of Crime Act 2002.
At present, there is uncertainty regarding UK POCA orders being enforced in Italy after the Brexit deadline, so the outcome of this case is difficult to predict due to its unprecedented nature.
The second case relates to clients of DBT & Partners who were found guilty in their absence after absconding prior to their trial. They were later located in Poland, and the UK Crown Prosecution Service duly requested that they be extradited and tried in a UK court.
However, Polish authorities denied that request, insisting that their sentences be served in Poland. This was due to questions being raised relating to the EU Prisoner Transfer Agreement, and its continuing validity post-Brexit.
No-deal may also mean that the UK will miss out on all of the facilities and operational aspects of current EU-facilitated law enforcement processes.
Liaison between HMRC, the Serious Fraud Office and the NCA is likely to be affected, and the sharing of information between those bodies restricted or significantly disrupted. This will affect the UK legal system’s ability to pursue international cases of fraud and money laundering, as cross-border asset confiscation and freezing is likely to be made more difficult, as will a number of other related processes.
One major impact of a no-deal Brexit will be the potential cessation of the UK’s dealings with both Europol and Eurojust. These two bodies are European law enforcement agencies tasked with the issuing of European Arrest Warrants to the local jurisdiction in charge of taking the suspects into custody.
According to recent Brexit legislation entitled The Law Enforcement and Security (Amendment) (EU exit) Regulations, as a result of leaving the EU with no deal, the UK will be without Europol and Eurojust and all the facilities and operational aspects they provide.
The regulations also state that the UK will forfeit access to tools such as the European Arrest Warrant and the European Investigation Order, and that asset freezing and recovery processes under the Proceeds of Crime Act are likely to be affected also.
Access to other international instruments of justice has also been called into question, including facilities for data transfer and access, along with intelligence sharing tools, counter-terrorism procedures, international sanctions that are currently in operation, mutual anti-money laundering processes and Mutual Legal Assistance options.
The current proposed agreement seeks to retain the use of many of these tools, with the proviso that EU member states would have the right to refuse their application – for example, they may deny the extradition of an EU citizen to the UK in order to defend their rights.
However, in the event of a no-deal Brexit, the effect on financial crime is likely to be as follows:
According to the Director of Public Prosecutions, following a no-deal Brexit, the UK may be forced to fall back on 27 separate older laws, resulting in a system that is far more complex and time-consuming.
“How will Brexit affect financial crime?” is a question that will continue to be asked until legally binding agreements are made regarding the UK’s withdrawal from the European Union.
As yet, the proposed regulations and restrictions are simply conjecture in the absence of any clear plan. However, as a result of Brexit, it appears likely that the UK will be required to forfeit its use of the European Arrest Warrant and the facilities provided by Europol and Eurojust at the very least.
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