LEGAL UPDATE:THE CRIMINAL JUSTICE Act 2011 identifies categories of white-collar crimes, and enhances powers to gather evidence. These powers can particularly affect innocent businesses in the financial sector, whose records may disclose part of the money trail in financial crime.
The categories of crime in the Act range across banking; investment and financial activities; company law; money laundering; fraud; bribery and corruption; crimes against consumers, or using electronic equipment or data, and may be extended to include competition and revenue offences.
Businesses can be slow to report financial crime, especially if misappropriated money can be recovered or repaid, because of the risk of catastrophic reputational damage.
There is no legal duty to report crime, but exceptional mandatory reporting obligations do exist. Financial institutions and designated persons are obliged to report suspected money laundering; auditors and other advisers must report suspected fraud in business records.
The 2011 Act creates a new offence: withholding information, where a person fails, without reasonable excuse, to disclose promptly to the Garda information he knows or believes might be of material assistance in preventing a white-collar crime or in apprehending or convicting a white-collar criminal.
Businesses, intermediaries and advisers will all need to be vigilant to assess unusual transactions, apparent anomalies, and unexpected developments they come across, in case these might contain “information of material assistance”.
The Garda can also obtain production orders under the 2011 Act, which require non-suspects to provide documents, records or statements about suspected offences, across all of the categories mentioned above.
Recent criminal legislation permits Garda interception of postal packets; phone-tapping; surveillance of suspected offenders using covert recording or tracking devices, and bank account monitoring.
Because of duties of confidentiality to customers, financial service providers will have to be very familiar with the their reporting obligations and the scope permitted for production and monitoring orders, which can legitimately cut across these duties.
Bank accounts can be frozen by the courts where the property could be evidence in criminal proceedings (in Ireland or abroad) or likely represents the proceeds of crime, even if nobody has yet been convicted.
The 2011 Act also allows the period available to the Garda to detain suspects for questioning to be suspended and resumed, even after a break of months, while other inquiries are pursued.
White-collar crime is usually elaborately concealed, so can go unnoticed by managers, auditors and clients, making uncovering it, and proving it beyond reasonable doubt, more difficult and resource-intensive. The statutory framework for investigations into white-collar crime is finally showing the same sophistication as the crimes it addresses.