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Ensuring our country is a high risk place for the world’s most sophisticated criminals to operate

3 Medi, 2018 | Areithiau

Lisa Osofsky, Director, at the Cambridge International Symposium on Economic Crime 2018, Jesus College, Cambridge.

You catch me before I’ve completed my first week as Director of the SFO, so I hope you won’t mind if I use this platform as an opportunity to introduce myself and my initial approach to the role.

Long before Bob Mueller began investigating Trump, he was Number 3 at the US DOJ and he sent me to work the BCCI bank failure–and other fraud cases with a US nexus.  That was 25 years ago and I was stationed at the SFO. What was new for the UK, but very familiar to me, was prosecutors and investigators, cops and accountants working side by side throughout the life of the case.

This is how I learned to make cases as a federal prosecutor in Chicago.  I did everything the agents did—followed leads, flipped defendants, who later became witnesses, determined best next investigative steps, subpoenaed records and shaped the indictment, all with federal agencies like the Drug Enforcement Administration, Internal Revenue Service, FBI, Health and Human Services department, the Bureau of Alcohol, Tobacco, Firearms and Explosives and local forces working with me.  It was federal crime, so white collar, mostly fraud and corruption cases; Chicago had no shortage of those. Of course powers and practices are different in different jurisdictions.

It wasn’t just working hand in hand with investigators that was part of my DNA as a prosecutor, it was working collaboratively—whether it was across jurisdictions (state, federal, local, international), across agencies (postals, DEA, other Assistant US Attorneys, or District Attorneys or State AGs), or across sectors (bankers, industry heads, accountants—the public and the private). 

That’s the way to make strong cases – cases with impact.  The most complicated and difficult cases, the cases the SFO makes and will continue to make, require it.

SFO today

The SFO I find in 2018 is a different animal from the SFO of my DOJ days. And I will be a different kind of Director. I started a 5-year term with the Attorney General’s support and commitment to maintaining the independence and prominence of this organisation. That’s the basis on which I took this job and what I expect to find throughout my tenure.

I bring both a public and private sector view, work ethic and commitment to this role at an exciting time. The markets are buzzing.  Worldwide events are exciting and changing daily.

Criminals thrive on volatility; they exploit it. Look at the headlines on IT failures at Lloyd’s TSB. Newspapers reported last weekend that the fraudsters jumped on this instantly, leaving many innocent victims in their wake. As head of a crime fighting agency, I am committed to making our country an inhospitable place for criminals like these. The SFO is in a good position to do just that. We’ve recently had an increase in our core funding; we’re using technology effectively; and we are fighting corruption around the world.

We’ve gotten a succession of DPAs under our belts in the UK.  It is no longer a US only phenomenon.  And DPAs are spreading across the globe.

I know DPAs well, having led as the EMEA arm of the biggest monitorship in the world—under a DPA imposed by DOJ, the money laundering and sanctions monitorship of HSBC Bank, though I’ve also led and worked on others.

Engaged and active approach

So, what do I envision for the SFO over the upcoming years, or at least the next months, when I’ll be settling in?  I intend to build on our successes with taking on and cracking the most complex and difficult crimes and bringing these cases to trial or, if appropriate – if in the public interest – to resolution through DPAs.

How will I do it?  By using an active and engaged approach to the following areas:

Cooperation

International

Our kinds of cases are becoming increasingly multijurisdictional and complex, so cooperation to achieve global settlements like Rolls-Royce are ever more important.  Strengthening and deepening the relationships that make this happen is going to be a major focus for me.

  • Working with the newcomers to DPAs – Sapin II, Argentina, Canada, Australia
  • The SFO hosts secondments and exchange programmes – for example we have a DOJ secondee as of this month. Welcome others, and placements too.
  • I will also be attending the 23rd IAP Annual Conference in Johannesburg later this month.

National law enforcement

  • The National Economic Crime Centre – I won’t say too much about the NECC because we’ll all be hearing from Nigel Kirby, the interim deputy director of the NECC project, later this morning. All I’d like to say is that it’s exciting to participate in its development: we support and look forward to playing a vital role in continuing to bring UK LE efforts together.  And we already are – the SFO has been contributing to the design and build of the NECC over the last 9 months and will be seconding staff into the centre when it becomes operational.
  • Continuing to work with the NCA to tackle serious and organised crime.
  • Regional and local forcesespecially, of course, the City of London Police who are the national lead force for economic crime and a partner in the NECC. And we’ll be hearing from Commander Karen Baxter next.
  • I see a natural ally in Revenue and Customs as we could build very strong cases together.

Regulators

The regulatory sector are valuable allies from the Financial Conduct Authority to the Federal Reserve and the Securities and Exchange Committee in the US. I’ve worked with many of them through my time as a monitor and formerly at the FBI.

NGOs

Closer work with non-governmental organisations and others on the ground who have a wealth of experience and information is also a priority. Sitting in London, we appreciate the insider knowledge that comes with interacting with businesses and local entities on a daily basis, in country. We find NGO input valuable as it can help inform our outlook and drive forward proactive intelligence development

Private Sector

I was a Money Laundering Risk Officer at GSI when the Proceeds of Crime Act first came into force and have seen the professionalisation of compliance over the past 15 years which continues to be a growing industry in the regulated sector. I worked first hand with Compliance Officers while at Exiger and Control Risks. I saw the developing skill set and witnessed the growth in areas of responsibility that has led to development of intel and proactive work to ensure the FIs and companies they help manage do not violate the law in areas like ML, sanctions, corruption and fraud.

I aim to leverage the information they hold to help us in law enforcement build strong cases. I also want to utilise the legal sector’s expertise. Lawyers, solicitors and barristers have a lot to offer in fighting crime and I intend to reach out to seek their input and ideas. The same is true for academics – I want to make use of new ideas and approaches that are out there.

Technological challenges need technological solutions

In addition to co-operation in all these areas, I will focus on the SFO’s strategic use of cutting edge technology.  I’ve been at a tech company the past five years; all the while the SFO has been building new technological advances into its systems.

Our cases are some of the most complex and data-heavy criminal investigations in any jurisdiction. There were 30 million documents in our investigation into Rolls Royce, which was our largest case at the time. We now have one with over 65 million, and there’s another in the pipeline which will have more than 100 million. To put that in perspective, the Panama Papers leak was only 10.5 million – and that would count as an average sized investigation for the SFO.

As a law enforcement body we absolutely have to work at pace and technology can help us do that, as well as save money particularly in relation to document reviews.

  • In 2016 the SFO deployed an AI robot to help check for legal professional privileged material in the Rolls Royce case, which led to savings of 80% in the area that it was used. That was widely reported on because it was a new approach in criminal investigations.
  • With the new eDiscovery platform we’re starting to use across all of our new cases, we’ll soon bring a range of machine learning and AI based technology assisted review features to our investigations; these build on the success of the LPP robot. This should create even greater efficiencies, and potentially help us reach charging decisions sooner, and shorten the time it takes to progress to trial. These technologies are used more commonly in civil cases, but we see them as essential, so we’re developing processes that will allow us to use them in our cases while still complying with criminal disclosure rules.

And we are exploring use of technology in other areas, including… 

Improving our Intelligence Function

The sheer amount of data available has increased exponentially over recent years. Our intelligence unit is already using more powerful analytic tools to make connections across disparate and diverse datasets to enhance our development of strategic intelligence.

It is not enough to only work with intelligence in a reactive, tactical capacity. Instead, there is a need to have an ability to collect and analyse data to improve knowledge of priority or emerging threats and to identify proactive investigative lines of enquiry. I aim to build our capabilities through the use of dedicated intelligence analysts and by strengthening our capabilities to deal with both human intelligence sources and internet intelligence in our investigations.

Encryption

In addition to the volume of data, one of the greatest challenges we face in our investigations is the wide range of devices we’re trying to extract material from, and the strength of encryption on them. There is a difficult balance to strike between privacy and security concerns and allowing those of us in law enforcement to access data to prevent and solve crime.

Technology companies need to work with us on this issue.

And as this is a common challenge among the law enforcement and regulatory communities, we’ll be looking to work closely with our partner agencies in the UK and abroad to ensure we’re taking a joined up approach to this, and so we can learn from each other and share best practice on other technology related issues too.

Our cases—how we make and bring our international corruption and complex fraud cases to court

We work with law enforcement partners to deploy the full range of tools we need to get the most out of the witnesses, co-operators and whistle-blowers who want to work with the SFO; this is how we bring the most compelling evidence before our judges and juries.

We will also continue to prioritise the recovery of criminal proceeds. By their nature, SFO cases involve sophisticated criminals who go to great lengths to distance themselves from the assets they control.  Significant challenges include assets located overseas; competing claims from third parties; the misuse of trusts; and assets hidden behind opaque structures around the world. These difficulties are well known to us in law enforcement but they can be particularly acute in SFO cases.  Over the last few years, the SFO has invested in this area of work through an expanded Proceeds of Crime & International Assistance Division. 

We will continue to pursue this vital area of work in conjunction with partners such as the National Crime Agency and the City Of London Police to maximise the impact on illicit finance flowing through the UK. 

DPAs

When considering resolutions short of trial (for example, DPAs), we must analyse whether the company has a credible and colourable defence under Section 7 (Adequate Procedures). Has the company engaged in proactive efforts to clean house and to reform?

Has the company instilled the right controls?

Are these backed by demonstrable commitment at the appropriate level?

The SFO will want assurance that companies are doing everything they can to ensure the crimes of the past won’t be repeated long after the watchful eye of the prosecutor moves on to another target.

Conclusion

Those are some of the areas in which I intend to focus on as I get “my feet under the desk” (as we say in Britain) or as I get “my sea legs” (as we say in Chicago). My approach will be proactive and this means working with more and more of you throughout the life of our cases—from intel to inception to investigation to trial and resolution to recovering the proceeds of crime. My goal is to make sure our country is a high risk place for the world’s most sophisticated criminals to operate and I want to support your efforts to do likewise in your jurisdictions.

I very much look forward to joining forces so that our collective efforts result in a level playing field and a safe place for law abiding companies and individuals to do business.

Thank you.

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