Britain’s FSA Targets Cross-Border Fraud
Following the global financial crisis, the spotlight on banks is intense, especially in Wall Street and The City of London. Now Britain’s Financial Services Authority (FSA) has radically stepped up its investigation of overseas banks and companies. With the crisis bringing to light potentially improper or fraudulent behaviour that crosses international borders, the Authority’s enforcement division investigated 30 overseas businesses in 2009, a six-fold increase over the five it looked in to in 2008.
As the Financial Times highlighted on February 2, this information was obtained from Freshfields, a London legal firm, by means of a freedom of information request. Of the 30 businesses involved, overseas companies accounted for 15 per cent, up from 2.4 per cent last year. The increase comes at a time when the FSA has also significantly expanded the assistance it renders to foreign regulators. The Authority received 830 new requests for help in the 2008-09 fiscal year, up 27 per cent from 2007-08. While the FSA has not particularly targeted overseas companies, the increase is a natural outgrowth of the financial crisis, which exposed a number of cross-border frauds and failures and prompted regulators to start working more cooperatively, Freshfields said. “London is a financial centre and governments are under pressure to respond to the crisis. If they are all talking to each other, someone is going to do something,” Raj Parker, one of the law firm’s partners pointed out.
Britain’s rising international focus is being replicated around the world. The US Securities and Exchange Commission (SEC) asked for overseas assistance 774 times during the 2009 fiscal year, an increase of 30 per cent. In London, the FSA went to the Court of Appeal on February 2 to challenge a lower court ruling that limited its ability to gather documents for the SEC after senior officials from both regulators met the previous day to hammer out new areas of cooperation. “The global banking crisis will only have reinforced the resolve of the SEC and [Department of Justice] to hunt down those responsible for such activity. Regardless of the outcome of this hearing, this trend of close cooperation is here to stay and means that both businesses and individuals are at risk of lengthy investigations in both the US and UK,” said Neill Blundell, head of the fraud group at Eversheds, another legal firm.
Not only are regulators more interested in looking overseas in the wake of the crisis, but international treaties are also making it easier to do so. The International Organisation of Securities Commissions has spent the past five years encouraging regulators worldwide to sign up to an information-sharing agreement. So far, 64 countries have done so.
The writing is on the wall. If you suspect that this sort of activity is going on in your business there is only one way to avoid being caught up in the ever-expanding international net. You need to call in a group of professionals who can use state-of-the-art technology and sophisticated methods of financial analysis and computer forensics to give you an accurate picture of what you will ultimately have to take responsibility for. Make sure you pick a group that has extensive overseas experience, a proven track record and can also present their findings to you in a way that fits the evidentiary requirements of your legal advisers if you need to progress to that stage.
