COVID-19 and the related ‘lockdown’ restrictions are placing the UK criminal justice system under considerable pressure. In the public sector, law enforcement agencies (LEAs), the courts and the prison system are having to adapt rapidly in response and, like the rest of the country, to adopt unprecedented measures to continue to progress their work. In the private sector, businesses need to be alert to developing fraud risks, both of fraud directly related to COVID-19, and of fraud facilitated by novel working patterns.
In this briefing we discuss a number of COVID-19 related measures impacting the investigation and prosecution of economic crime, and the criminal justice system more broadly. We also touch on fraud risks and financial crime compliance considerations arising from the COVID-19 pandemic, which we will discuss more fully in a future briefing.
Recent developments discussed in this briefing relevant to the investigation and prosecution of crime, and financial crime compliance, include the following:
- Investigations and police powers: LEAs have already adopted new process and procedures in relation to conducting investigations. The Crown Prosecution Service (CPS) and the National Police Chiefs’ Council (NPCC) have issued an interim interview protocol which seeks to avoid unnecessary in-person interviews.
- The Police have been granted additional COVID-19 specific powers to deal with people who breach the current restrictions; they can instruct people to go home, leave an area or disperse. However, their new responsibilities will likely stretch Police resources, which may be diverted from (non-COVID-19 related) fraud and economic crime.
- A number of changes have been made to the oversight of LEAs and intelligence agencies, including the appointment of Judicial Commissioners, issue of urgent warrants and retention of biometric data, designed to minimise COVID-19 related disruption.
- Prosecution: The CPS and the NPCC have formally categorised serious fraud cases and complex investigations as low priority, in a new interim charging protocol.
- Criminal proceedings: New legislation widens the scope for criminal proceedings to be conducted remotely by video or audio link. However, jury trials are not within scope of the amendments and new jury trials have been delayed indefinitely until the safety of court attendees can be ensured. Many pre-existing jury trials have been brought to a halt due to COVID-19.
- Prisons: Prisoners posing a low risk of harm to the public are being considered for early release.
- Sanctions/export control: The EU has issued restrictions relating to the export of personal protective equipment. The US has issued specific guidance on the humanitarian exemptions in respect of Iran sanctions.
For businesses, guarding against the risk of fraud will be a key compliance concern at this time. There is widespread agreement amongst LEAs that COVID-19 will result in an increase in fraud, which already comprises one-third of all reported crimes in England and Wales. There have already been reports of scammers posing as charities and selling counterfeit medical goods, whilst the UK Government accepts that its emergency assistance programmes are inherently risky from a fraud perspective – all at a time when LEAs are adapting to new working practices.
With the prevalence of remote working, cybercrime is another area of concern. There are fears that criminals and terrorists will exploit the stretched resources of LEAs, as well as businesses whose focus is diverted from legal and compliance issues.
Adding to the complexity for businesses, there may be a need to adapt existing compliance processes so as not to impede customers’ access to services in light of the lockdown restrictions. As discussed in our earlier briefing on its Dear CEO Letters, the Financial Conduct Authority (FCA), for example, has said that it expects to see some flexibility in how firms comply with their client identity verification obligations.
We will return to these topics in a future briefing, but first consider the changes noted above which are impacting the criminal justice system.
Investigations and police powers: the impact of the current crisis
Practical impact on LEAs
The Police, National Crime Agency (NCA) staff and those holding other national security roles are classified as ‘critical workers’, but are still bound to be impacted by the current restrictions. Whilst employees may travel to work where they cannot work from home, they still need to maintain social distancing and some will be forced to self-isolate, attend to childcare or look after members of their families. Anecdotally, many LEAs are not well-equipped for staff to work from home and the transition will, no doubt, cause difficulties, as indeed it has for many businesses.
Some aspects of normal investigation procedure will also be affected by the virus. In particular, the CPS and NPCC have issued a new interview protocol, designed to avoid unnecessary interviews, part of which specifies that legal advice should take place by telephone or video link whenever possible. Experience to date suggests that there will be some variances between different police forces as to how this protocol is implemented and, more generally, as to how social distancing will be achieved in the context of investigatory work. With respect to the Serious Fraud Office (SFO), for whom compelled ‘section 2’ interviews are a core element of the investigative process, it remains unclear whether interviews will be conducted remotely during the lockdown period, or whether the focus will be solely on documentary review work and analysis – we expect that this will depend in part on the length of the lockdown restrictions.
Of course, in addition to their ‘business as usual’ work, the Police have a critical role in ensuring that the new restrictions on gatherings and unnecessary movement are enforced. Under the Health Protection (Coronavirus, Restrictions) Regulations 2020, the Police have been given additional powers to respond to the virus. These include the ability to instruct individuals to go home, leave an area or disperse and to issue fines, starting at £60, to those who are not adhering to current restrictions. If not paid, Magistrates may impose unlimited fines. Those who refuse to comply with such directions may be arrested. It can also be expected that the Police will have additional work as a result of the increased fraud threat posed by the virus and current lockdown conditions (discussed above). These increased police responsibilities and policing needs have brought an additional strain on resources; in response, London’s Metropolitan Police has asked recently retired officers to re-join the force.
In short, these are challenging times for LEAs. Suspects, witnesses and victims can expect delays in investigations and, indeed, the prioritisation of scarce resources may mean that some matters that would otherwise be investigated are not progressed at all (or not in a timely manner). Even at the best of times, fraud investigations are often difficult (in particular given the cross-border nature of most organised and complex frauds) and many reported frauds are never investigated. As such, the new resourcing challenges underscore the importance for businesses in doing everything possible to proactively protect themselves against fraud.
Oversight of intelligence and LEAs
Of somewhat more academic interest, the Coronavirus Act 2020 (the Act) introduces a number of changes with a view to minimising delays in the criminal justice process (to the extent possible) and mitigating the effects of any such delay, notably:
- New powers for the appointment of additional Judicial Commissioners (section 22 of the Act). The Investigatory Powers Commissioner, who oversees the exercise of investigatory powers by intelligence agencies and LEAs, may appoint directly additional temporary Judicial Commissioners for a 6 month term (up to a maximum tenure of 12 months) if there is a shortage arising from the impact of COVID-19.
- Approval of urgent warrants (section 23 of the Act). Urgent warrants, which allow LEAs to access certain information for investigative purposes, have to be approved by the Secretary of State and a Judicial Commissioner. Judicial Commissioners now have up to 9 working days to authorise such warrants, which will last for up to 12 working days (ordinarily it is a maximum of 3 and 5 working days, respectively).
- Extension of time limits for retention of fingerprints and DNA profiles that would be destroyed within the next 12 months (section 24 of the Act). Fingerprints and DNA profiles retained under counter-terrorism provisions (or that may otherwise be relevant to national security) may be retained for an extra 6 months without the Police having to make, as it ordinarily would, a National Security Determination (overseen by the Biometrics Commissioner). The extension may be lengthened to a maximum of 12 months.
Civil liberties groups have expressed concern about the speed with which the Act was passed and the relative lack of scrutiny it received. The removal of some of the restrictions relating to biometrics retention and the issue of urgent warrants may also cause concern, even if they are only in force on a temporary basis.
Legal aid firms and practitioners
Restrictions on travel and interactions with others will impact all legal practitioners, but we anticipate that criminal legal aid firms and practitioners will be affected more than most. Remote communications may be particularly difficult with their clients, many of whom are vulnerable. Other practical concerns, such as fewer duty solicitors being available and cash flow issues, will likely impact access to legal aid generally.
The Legal Aid Agency (LAA) has published advice for such firms setting out practical steps, including the relaxation of certain LAA rules and hardship funding, to ensure practitioners can continue to provide advice to their clients.
Charging decisions: serious fraud and complex investigations
Importantly for those currently under investigation, in response to the court delays (see below), the CPS and the NPCC have issued a new interim charging protocol. This identifies three categories of cases:
- ‘Immediate’, which are those where the investigator is seeking remand in custody such as homicides, high risk domestic abuse and COVID-19 offences.
- ‘High priority cases’, where the defendant will not necessarily be held in custody (e.g. other domestic abuse and drug supply offences).
- ‘Other cases’, where no arrest is required. Most notably this includes serious fraud cases, the rationale being that such cases involve lengthy investigations and disclosure, suspects tend to be released under investigation or interviewed as volunteers and they are likely to clog up the court system at this point in time.
The CPS has published additional interim guidance for prosecutors, which emphasises the need to consider, when making charging decisions, the impact of COVID-19 noting that “each case that is introduced into the system, or kept in the system, will contribute to the expanding pipeline and delay”. The guidance not only affects future decisions, but also identifies the outbreak as a “change in circumstances” requiring prosecutors to consider whether or not existing prosecutions should continue.
The SFO has faced significant criticism for the length of its investigations, which typically last for multiple years. The protocol does not strictly apply to the SFO but, assuming a similar approach is taken (since similar drivers apply), a delay in bringing charges may not, in that context, have much immediate impact. However, if the protocol remains in place for a significant period, it will only exacerbate the problem. For suspects who were nearing a charging decision, or perhaps the prospect that a case would be closed with no further action, the prospect of further delay will be particularly frustrating.
Court proceedings and jury trials
Jury trials which were due to start since 23 March 2020 have been delayed indefinitely until the safety of court attendees can be ensured. Those ‘essential’ to the running of the justice system are classified as ‘key workers’ and efforts are being made to bring existing jury trials to a conclusion whilst maintaining social distancing rules. However, issues around attendance have brought many ongoing trials to a halt.
The Act has expanded the use of live video/audio links so that eligible criminal proceedings (such as extradition hearings, applications for restraint and case management hearings) can continue, subject to certain safeguards. However, some hearings have been deemed inappropriate to be held remotely, such as those relating to mental health (e.g. unfitness to plead). The CPS has produced a helpful ‘live-link-matrix’ of which types of hearings can or cannot be conducted by video or audio links.
Under sections 53-56 of the Act, the courts retain discretion over whether eligible hearings take place and must be satisfied, having heard representations from all parties, that “it is in the interests of justice”. Key considerations will likely be whether the attendees would be able to take part effectively and the suitability of the facilities available.
The public should be able to watch or hear proceedings via broadcast or recordings; some civil hearings have now been broadcast on YouTube, but it is unclear exactly how this will be managed in the context of criminal proceedings. In keeping with present restrictions, it will be an offence to make or attempt to make unauthorised recordings or transmissions of such broadcasts, although it remains to be seen how this will be policed in practice.
Prisons: The spread of COVID-19 among prisoners
The threat of infection amongst prisoners gives rise to human rights considerations for those in charge of their detention, which needs to be balanced with protecting the public. Following the World Health Organisation’s guidelines on the control of the virus in prisons and detention centres, prison visits in the UK have been temporarily suspended. The Prison Service is trying to increase its video conferencing facilities so prisoners can speak with their legal advisors (who are also prohibited from visiting) and some prisoners have been issued phone handsets which allow them to speak to a small number of pre-authorised contacts.
Other measures taken in the UK include the temporary suspension of all face-to-face parole board hearings and the curtailing of daily recreational activities (including going to worship).
A significant minority of prison staff have already had to self-isolate, which will test the prison estate’s ability to manage safely and effectively the prisoners in their care. Prisoners in a number of countries have complained that they are insufficiently protected and being kept in cells with inmates who have tested positive for COVID-19. In response, the Ministry of Justice has announced plans to install temporary cells in a number of prisons in the UK.
Many countries have granted lower risk prisoners early release. In the UK, pregnant women who do not pose a high risk of harm and those in ‘Mother and Baby Units’ will be released from prison. Other low risk prisoners are being considered for release and those within two months of their release date will be released on temporary licence. However, this is not without issues, and plans were put on hold briefly after six inmates were mistakenly released.
Other areas impacted by COVID-19: sanctions and export control
As Europe went into lockdown, the European Union announced restrictions on the exports of personal protective equipment (implemented via Commission Implementing Regulation (EU) 2020/402 of 14 March 2020 ‘Making the exportation of certain products subject to the production of an export authorisation’). Both the EU and the UK have published guidance on the new restrictions.
In terms of ‘business as usual’ sanctions compliance and export licensing in the UK:
- The Export Control Joint Unit’s (ECJU) role in approving strategic export licences has been identified as ‘business-critical’ by the Department for International Trade. The ECJU has brought in certain temporary measures in attempt to mitigate disruption to the export licence application process and its compliance programme will continue, but all site audits have been cancelled and replaced by remote audits.
- The Office of Financial Sanctions Implementation (OFSI) is continuing to prioritise urgent and humanitarian licence cases, but work on all cases, including licence applications and compliance reports, will continue. OFSI has admitted that significant staff absence may in due course affect their usual response timescales.
In the international sanctions space, the US Government has faced calls from international (and former American) diplomats to relax sanctions imposed on Iran, beyond the existing humanitarian exemptions, on the basis that they are limiting Iran’s ability to purchase essential items from abroad, including drugs, raw materials and equipment needed to manufacture medicine (notwithstanding that certain medical equipment can be licensed). On 27 February 2020, the Office of Foreign Assets Controls (OFAC) issued a new Counter Terrorism and Iran-related General License No. 8 (GL8) together with new frequently asked questions (FAQs) about GL8 and the Swiss Humanitarian Trade Arrangement. GL8 authorises certain Iran-related humanitarian transactions by US and non-US persons, even if the Central Bank of Iran (an SDN) is directly or indirectly involved. On 6 March 2020, OFAC also issued a new FAQ relating to available humanitarian exemptions. Nonetheless, calls for further relaxations have continued.
The existing delays in the criminal justice process will only be exacerbated by the impediments COVID-19 will inevitably present to the progress of investigations and charging decisions, pre-trial processes such as disclosure, and the continuation of jury trials. The adage ‘justice delayed is justice denied’ has particular force in the criminal sphere. However, the Scottish Government’s suggestion that trials might continue without juries has been roundly criticised, and abandoning prosecutions to avoid clogging the system would itself risk injustice, including to victims.
As with most other areas of life, it seems that the criminal justice system will need to be as flexible as possible to manage the impact of government restrictions. The development of that flexibility is still at a relatively early stage (and perhaps lags behind that of the civil courts). Lawyers will need to find ways to facilitate such an approach whilst still ensuring that their clients’ rights are respected. Clients will be particularly astute to minimise fraud risk and the risk of exposure to other criminal activity at this uncertain time – and we will explore this further in a future briefing.
The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020