“Too big to fail and too big to jail?” Are some corporations’ untouchable to the UK regulators?

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Blog by Amber Egan, UWE Bristol Law alumni

Public trust in business has been tarnished by the disclosure of fraudulent, dishonest and harmful activity by banks and corporations, such as the fall of Arthur Andersen and Libor Scandal.[1] The extent of corporate crime was brought to light during the 2007-2008 financial crisis, there was vast illegal conduct of many financial institutions who were then bailed out by the taxpayer. This was the turning point for the regulators and governments, it highlighted that tighter controls and sanctions were needed for corporations.

For corporations to be held accountable the prosecution had to prove that a person had “the directing mind and will of the company,” which is known as the identification doctrine.[2] This doctrine failed at many hurdles, including ignoring the complexity of modern corporations, the inequality between different sized corporations and individuals, but also, a lack of evidence for prosecution. Due to such ambiguity surrounding responsibility in larger complex corporations, it may be impossible to show ‘a controlling mind and will’. The identification doctrine can cause inequality between how ‘the untouchable executives’ and the ‘low-hanging fruit’ are treated, lower-level employees can be easy scapegoats for large corporations.[3] Following the Libor scandal, several low-level traders were prosecuted such as UBS trader Tom Hayes[4] whereas UBS could not be held criminally liable due to difficulty in fulfilling the requirements of the doctrine.

To try and address the issues with the identification doctrine, the UK introduced a series of statutes using the failure-to-prevent module to strengthen the approach to corporate economic crime. The new module was employed in both The Bribery Act 2010 and The Criminal Finances Act 2017, the offences can be classed as strict liability as the only defence available to corporations is a due-diligence defence, where the corporation can prove that ‘adequate procedures’ were in place to prevent such conduct making prosecution straight forward.[5]  The results from charges brought by the Serious Fraud Office (SFO) are disappointing, the failure-to-prevent bribery offence[6]has only had two convictions since the introduction in 2010. The regulators have mainly employed DPAs as punishment instead of pushing for conviction. Unfortunately, the enforcement strategy is often determined by the size and the importance of the corporation, there has only been two convictions using the failure-to-prevent module, both being SMEs.[7] The regulators and even the judges fear prosecuting corporations that are ‘too big to fail’ and as a result it can be argued they alter the rules to fit the corporation making them ‘too big to jail.’

The SFO is not the only regulator in the UK with power, the Financial Conduct Authority (FCA) can take action such as suspending or withdrawing a firm’s authorisation, issuing civil fines, injunctions, restitution orders and insolvency orders, however breaches rarely amount to anything but fines.[8] The FCA has the power under the Money Laundering Regulations 2017[9] to criminally prosecute a person or organisation it suspects of not putting in place sufficient safeguards against money laundering. The FCA has not brought a single criminal prosecution against a firm or individual for breaching its new Regulations which came into effect in 2017.[10]

The UK introduced DPAs in 2013,[11] the driving force for legislating DPA’s is the difficulty in achieving successful prosecutions of corporate offenders, however they have had limited application. They often include provisions for corporations to pay large fines, along with improving their conduct and governance through an external monitor. The aim is to foster cooperation between corporations and regulators by encouraging self-reporting in aid of leniency.[12]  Even though DPAs are available to be used by all enforcement agencies, so far they have only been used by the SFO for nine agreements and have largely been for bribery offences.[13] Whereas since 2013, the US has entered into 280 DPAs for numerous financial crimes. [14] Some positives of DPAs are that funds and resources are saved by avoiding a lengthy court trial especially where a corporation self-reports and it limits the uncertainty of a trial. One of the weaknesses with a DPAs is inconsistency between large and SMEs. SMEs often commit much less severe crimes, but as they do not pose a risk to the economy when they go bankrupt, a prosecution can pushed for. Another weakness is the deterrence given with a DPA, HSBC is a repeat offender when it comes to financial crime so there is a risk of financial penalties from DPAs becoming “a cost of doing business, lessening the impact and the effectiveness of DPAs.”[15]

The regulators principal argument for the move towards DPA’s is the risk of the collateral consequences caused by a prosecution.[16] When a corporation is convicted it would bring collateral consequences on potentially innocent employees and shareholders, along with possible catastrophic effects for the industry, the stock market and the knock-on effects for the wider community.

For example, HSBC being a systematically important institution meant that it was untouchable by regulators, the fear of the damage to the global economy was far greater than the need for prosecution in the UK and US. As a result, they were offered a DPA and controversially kept their banking licence. Many corporations have essential government contracts so prosecutors are careful to avoid penalties leading to automatic debarments that would affect government operations where government contracts are essential the collateral consequences would be severe, such as military contracts.[17]

Prosecutors seeking to deter corporate crime should adjust their strategies to focus more on charging culpable individuals, as there has been very little prosecution activity for individuals also. However, prosecution is only a benefit if the correct individuals are being identified, as discussed above, lower-level employees are made scapegoats by senior executives.

Does the Senior Managers Certificate Regimer light at the end of the tunnel?

The SMCR aims to encourage a culture of staff at all levels taking personal responsibility for their actions and making sure staff clearly demonstrate where responsibility lies.[18] This makes the issue of identification much easier as responsibilities of senior managers will be clearly set out and, should something in their area of responsibility go wrong, they can be personally held accountable. For the senior managers regime, firms must provide documentation to the FCA to show responsibilities of senior managers and their suitability for their jobs.[19]

The certification regime is for those that are not senior managers but ‘whose role means it’s possible for them to cause significant harm to the firm or customers’.[20] A firm should not permit an employee to carry out certain functions unless it has issued them with a certificate to say that they are fit and proper for the specific function.

The FCA has extensive powers allowing them to issue penalties, custodial sentences and prohibitions[21] for breaches of the SMCR including breaches of the Code of Conduct[22] and breaches of The Fit and Proper rules,[23] set out in the FCA handbook.[24] However, as seen before just because the FCA has the power to impose custodial sentences does not mean they will, the FCA has only imposed fines under the SMCR as yet.


[1] Ministry of Justice Corporate Liability for Economic Crime Call for Evidence (Ministry of Justice: London, 2017) p3

[2] Tesco Supermarkets LTD v Nattrass [1972] AC 153

[3] Nick Werle, ‘Prosecuting Corporate Crime When Firms Are Too Big to Jail: Investigation, Deterrence, and Judicial Review’ (2019) 128 Yale L J 1366, p1412

[4] R v Tom Alexander William Hayes [2015] EWCA Crim 1944.

[5] A Ashworth, ‘A new generation of omissions offences?’ (2018) 5 Crim. L.R. 354 p.4.

[6] The Bribery Act 2010 s7.

[7] There have been two convictions under s7 of the Bribery Act 2010 for failing to prevent bribery, while under s45 and s46 of the Criminal Finances Act 2017 there has been no convictions to date. The government is unable even to specify the number of companies who fail to file tax returns or the amount of penalties collected for late filing.<https://leftfootforward.org/2021/04/our-watchdogs-are-toothless/ > accessed 29th April 2021

[8] The Financial Conduct Authority ‘Enforcement’ (FCA,2016) <https://www.fca.org.uk/about/enforcement> accessed 29th June 2020

[9] This replaced the Money Laundering Regulations 2007

[10] Rozi Jones ‘FCA yet to prosecute under 2017 money laundering rules’ (Financial Reporter, January 2020) <https://www.financialreporter.co.uk/regulation/fca-yet-to-prosecute-under-2017-money-laundering-rules.html#:~:text=For%20over%20two%20years%20the,up%20to%20two%20years’%20imprisonment.> accessed 5th August 2020

[11] Crime and Courts Act 2013 s45 Schedule 17

[12] F Mazzacuva, ‘Justifications and purposes of negotiated justice for corporate offenders: deferred and non-prosecution agreements in the UK and US systems of criminal justice’ (2014) 78 J. Crim. L. 249

[13] SFO have come to nine agreements since the introduction of DPAs in 2013.

[14] Gibson Dunn, ‘2019 Year-end update on corporate non-prosecution agreement and deferred prosecution agreements’ (Jan 2020) <https://www.gibsondunn.com/2019-year-end-npa-dpa-update/> accessed 4th August 2020

[15] Editorial, “Too Big to Indict”, New York Times, 12 December 2012, quoted in Reilly, “Justice Deferred is Justice Denied” (2015) Brigham Young University Law Review 101, 103.

[16] Nick Werle, ‘Prosecuting Corporate Crime When Firms Are Too Big to Jail: Investigation, Deterrence, and Judicial Review’ (2019) 128 Yale L J 1366, p1378

[17] For example, Rolls Royce, Airbus and G4S all have government contracts.

[18] Press Release, ‘FCA outlines proposals to extend the Senior Managers and Certification Regime to all financial services firms’ (FCA, July 2017) <https://www.fca.org.uk/news/press-releases/fca-outlines-proposals-extend-senior-managers-certification-regime-all-firms> accessed 8th April 2020

[19] Financial Services (Banking Reform) Act 2013 Part 4 s29

[20] O Jackson, ‘Primer: the senior Managers certification regime’ (2018) International Financial Review 1

[21] Lexis PSL ‘FCA and PRA investigations, enforcement and discipline overview’ (Lexis Nexis, 2020) <https://www.lexisnexis.com/uk/lexispsl/corporatecrime/document/393813/583N-GY51-F18F-M1K2-00000-00/FCA-and-PRA-investigations,-enforcement-and-discipline—overview> accessed 29th April 2020.

[22] Referred to as COCON

[23] Referred to as FIT

[24] Examples of penalties include J Staley CEO of Barclays for breaching COCON 2.1.2 fined £321,200 by the FCA, Guillaume Adolph a former Deutsche trader for breaches of Principle 5 and FIT fined £180,000 and a prohibition by the FCA. See Financial Conduct Authority ‘Fines 2018’ (FCA,2020) <https://www.fca.org.uk/news/news-stories/2018-fines> accessed 29th April 2020.

Combating environmental degradation in Nigeria through the recognition of the Rights of Nature

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By Cleverline T Brown, PhD student, a member of the Environmental Law and Sustainability Research Group.

Environmental degradation has increasingly plagued the human and natural environment especially since the discovery of petroleum in Nigeria. The right to a clean and healthy environment although provided for in the Constitution,[1] has been seen to be non-justiciable[2] except by alternative pathways such as through the application of the African Charter on Human and Peoples Rights (ACHPR) [3] or in a foreign court. It is also a fact that environmental pollution cases have been lost due to technicalities.[4] This has emboldened some petroleum sector operators to continue bad environmental practices. Hence the need for alternative ways to combat environmental degradation from bad environmental practices such as the recognition of the rights of nature.

Global development of rights of nature

The concept of the rights of nature is an emerging field that is gradually being recognised by countries around the world. While the rights of human victims of environmental harm are protected under human rights law,[5] other victims of environmental harm such as nature and natural resources, exist and have been left behind by policy and law-making thereby rendering them invisible and silenced in the search for justice.[6] Rights of nature are rights that nature and natural resources possess, as distinct from the right of humans to a healthy environment. It can be a reformulation and expansion of existing human rights and duties in the context of environmental protection.[7] In some jurisdictions like India, New Zealand, Ecuador, Brazil, Columbia, Bolivia, nature is accorded human status.[8] This implies the right to be protected just like human beings under human rights laws; and the right to enforce such rights under the law.[9] Stone noted that until the rightless thing receives its right, we cannot see it as anything but a thing for the use of ‘us’ – those who are holding the rights at the time.[10] More countries are legally recognising the rights of nature in their domains. In February 2021, the Innu Council of Ekuanitshit recognised the Magpie River, a 3000km (186 miles) waterway in the cote Nord region of the Canadian province of Quebec, as a legal person.[11] Some of the sources of the rights of nature in these jurisdictions include case law,[12] the Constitution and other legal instruments.[13]

Rights of Nature in Nigeria

The non-justiciability of the environmental rights provisions in the Constitution of Nigeria has prompted victims of environmental harm to seek access to courts in pursuit of justice, through other pathways.[14] While this effort has yielded some positive results, it has not yielded an express pronouncement on the rights of nature and natural resources per se to be protected, specifically in Nigeria. When environmental harm occurs, the rights sought to be protected are the rights of the human victims alone and these rights do not extend to the protection of nature. Recognition of the rights of nature in Nigeria can expand the definition of ‘victims of environmental harm’ and extend the frontiers on which environmental degradation can be combatted. The closest to rights of nature practiced in Nigeria is the designation of protected areas. These areas include forest reserves and plantations, national parks, nature reserves and gazetted forests.[15] This implies that the areas so designated are protected against farming, hunting, trapping, timber cutting and other human activities. It does not, however, protect these natural resources and rivers from the effect of oil spills and other negative impacts of petroleum sector activities.[16] This does not also give the protected areas personhood or the right to enforce the protected status. Legally recognising the rights of nature in Nigeria could be a game-changer in the move to combat environmental harm especially from petroleum sector operations. It is argued that an outright pronouncement on the rights of nature and natural resources can provide an alternative option in the fight against environmental degradation from environmental harm and easy access to courts to enforce those rights.

Challenges of Rights of Nature

While some gains have been made by the countries that have taken the lead in establishing rights of nature,[17] challenges remain on the full realisation of the effect of the rights of nature. First, it is difficult to assess how far the courts will go on the issue of enforcement of such rights. This is because the concept of rights of nature has not been rigorously tested before the courts to establish precedents.[18] Second, like every other law, the challenges of compliance and enforcement remain due to the lack of political will to enforce compliance with the laws.[19] Third, governments still place the exploitation of natural resources for gains over the protection of nature and natural resources. This is because often, the government relies on the proceeds from the exploitation of natural resources to provide basic amenities for its citizens.[20] Fourth, individuals and small businesses fear that such rights will lead to a multiplicity of lawsuits threatening their businesses and livelihood.[21] Fifth, it is believed that existing legal and statutory frameworks adequately cater to protect nature and new laws stipulating new rights are not required.[22]

Conclusion

The significance of the attention on the rights of nature is vital to the fight against global environmental degradation. If more countries recognise the rights of nature, it could put a check on how nature is interacted with by human beings because these rights will be put into consideration in such interactions. Such considerations can be in form of complying with environmental regulations, policies and standards. Therefore, it is contended that if compliance and enforcement of environmental laws are effectively observed, the environmental rights of human beings and nature can easily be realised.

Recognition of the rights of nature could lead to stronger natural resource laws. Legally recognised rights of nature and the human right to a healthy environment can work simultaneously to promote effective compliance and enforcement because humans have an interconnectedness with the natural world and should acknowledge the rights of nature to exist, persist and maintain its vital cycles.[23] The legal recognition of the rights of nature by Nigeria can be an effective legal tool to save the Nigerian environment from a gradual but steady decline.[24]


[1] S 20 of the Constitution of Nigeria 1999 requires the government of Nigeria to protect and improve the environment and safeguard the water, air and land, forest and wildlife of Nigeria and s 33 (1) which guarantees the right to life of every citizen of Nigeria.

[2] See s 6 (6) c of the Constitution of Nigeria 1999 which essentially prevents any enquiry into any issue or question as to whether any act of omission by any authority or person or as to whether any law or any judicial decision is in conformity with the Fundamental Objectives and Directive Principles of State Policy set out in Chapter II of this Constitution (under which a protected environment is provided for in the Constitution).

[3] Articles 4 which provides for the right to life and 24 which provides the right to a general satisfactory environment.

[4]  Such as standing and loopholes in the law. See Oronto Douglas v Shell Petroleum Development Company Limited & Ors (1998) LPELR-CA/L/143/97 Law Pavilion Electronic Law Report- Court of Appeal. Some of the oil pollution related cases arising from some Ogoni communities fall into this category.

[5] EO Popoola, ‘Moving the Battlefields: Foreign Jurisdictions and Environmental Justice in Nigeria’ <https://items.ssrc.org/…environments/moving-the-battlefields-foreign-jurisd…> accessed 19 August 2019.

[6] It has been argued that other victims of environmental harm exist and have been left behind by policy and law-making thereby rendering them invisible and silenced in the search for justice. See M Hall, Environmental Harm: The Missing Victims?, vol 90 (Centre for Crime and Justice Studies 2012) 1.

[7] D Shelton, ‘Human Rights, Environmental Rights, and the Right to Environment’ (1991) 28(1) Stanford Journal of International law 103, 117.

[8] Examples are New Zealand’s Whanganui River was granted rights of personhood in 2017, India’s Ganges River, Article 71 of the 2008 Constitution of Ecuador, essentially provides that nature has the right to integral respect for its existence and the maintenance and regenerations of its life’s cycle’s structure, functions and evolutionary processes. Examples of jurisdictions that have also recognised the legal rights of nature include Bolivia (Law of the Rights of Mother Earth and the Framework Law of Mother Earth and Integral Development for Living Well 2012); Columbia (A 2018 Supreme Court decision held the Columbian Amazon to be a subject of rights based on the Columbian Constitutional’s Courts ruling that Atrato River had legal rights to be protected, conserved and restored); India (The 2018 Uttarakhand High Court decision declaring the animal kingdom to legal entities with rights, duties and liabilities of a living person); and the United States of America where Tamaqua Borough in Pennsylvania recognised the rights of natural communities and ecosystems in a 2006 ordinance) see G Chapron, Y Epstein and JV Lopez-Bao, ‘A Rights Revolution for Nature’ (2019) 363(6434) Science 1392, 1393

[9] CD Stone, Should Trees Have Standing? Law, Morality, and the Environment (Oxford University Press 2010) 264.

[10] ibid 3.

[11] J Kestler-D’Amours, ‘This River in Canada is now a ‘Legal Person’’ (2021) <https://www.aljazeera.com/news/2021/4/3/this-river-in-canada-now-legal-person> accessed 12 April 2021.

[12] As in the Indian cases of Maharaj Singh v Indian Oil Corporation (1999) A. I. R. 81; M. I. Builders v. Radhey Shyam Sahu M.C. [1999] A.I.R.  SC 2468; Mehta v Kamal Nath (1997) 1 S.C.C. 388.

[13] Constitution of the Republic of Ecuador 2008 Chapter 7, Articles 71, 72 and 73; Te Urewera Act 2014 of New Zealand; Constitution of Brazil 1993.

[14] Popoola (n 5).

[15] OI Imasuen, JN Oshodi, TUS Onyeobi, ‘Protected areas for environmental sustainability in Nigeria’ (2013) 17 (1) Journal of Applied Science and Environmental Management 53, 56.

[16] AP Onyena and K Sam, ‘A Review of the Threat of Oil Exploitation to Mangrove Ecosystem: Insights from Niger Delta, Nigeria (2020) 22 Global Ecology and Conservation 1, 3.

[17] S Borràs, ‘New Transitions from Human Rights to the Environment to the Rights of Nature.’ (2016) 5(1) Transnational Environmental Law 113, 143.

[18] CR Giraldo, ‘Does Nature Have Rights? Successes and Challenges in Implementing the Rights of Nature in Ecuador’ (2013) <https://constitutionnet.org/news/does-nature-have-rights-successes-and-challenges-implementing-rights-nature-ecuador> accessed 4 December 2020.

[19] Ibid.

[20] Ibid.

[21] OA Houck, ‘Noah’s Second Voyage: The Rights of Nature as Law’ (2017) 31(1) Tulane Environmental Law Journal 1, 29.

[22] C McDonough, ‘Will the River Ever Get a Chance to Speak? Standing Up for the Legal Rights of Nature’ (2020) 31(1) Villanova Environmental Law Journal 143, 161.

[23] Borràs (n 17) 143.

[24] DR Boyd, The Rights of Nature: A Legal Revolution That Could Save the World (ECW Press 2017) 280.

Professor Nicholas Ryder wins Anti Financial Crime Award

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Congratulations to UWE Bristol Law School’s Professor in Financial Crime, Nicholas Ryder, on receiving the Themis ‘Strides Against Money Laundering’ award at their recent Anti Financial Crime Awards virtual ceremony on Tuesday 23 March 2021. This award promotes the fight against Money Laundering by recognising the efforts of an individual or organisation making significant progress in the prevention of illicit monies entering the banking systems.

“This award reflects Nic’s innovative research and commitment to encouraging collaboration between academic and professional policy-making arenas, a fantastic achievement, well done.”

Rob Thompson, The London Institute of Banking & Finance, judge of the Strides Against Money Laundering award

“I’m very humbled and very honoured to accept the award from Themis. It was very unexpected so I’d like to thank the company and the judging panel. I think it goes to show the importance of research that academics can conduct and how we can positively contribute towards tackling the threat posed by financial crime.”

Professor Nicholas Ryder

Themis is a purpose led organisation committed to reducing the global impact of financial crime. As a bridge between the public and private sectors, we want to highlight the fantastic work, best practices, achievements and determination of individuals and organisations in their contribution in the fight against financial crime.

You can watch the full awards ceremony video and find out more information on the Themis website.

Criminal Justice in ‘Crisis’: Covid-19 and the Right to a Jury Trial

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Blog by Dr. Edward Johnston, Senior Lecturer in Law at UWE Bristol.

In November the back log of outstanding cases in the criminal courts of England and Wales stood at 457,518. According to the same Sky News report, this is some 100,000 more than February 2020. Of the near half a million outstanding cases, just under 54,000 are for cases to be heard in the Crown Court and the remaining 403,000 cases are set to be heard in the Magistrates’ Court.

Moving forward, the picture looks even more bleak. Crest Advisory, who specialise in predictions and analytical models concerning criminal justice suggest that by 2024, there could well be 580,000 cases outstanding in the magistrates’ court and 195,000 outstanding in the Crown Court.

It is clear that something has to give to solve this ‘crisis’ – a word often used to describe the current state of criminal justice. However, is ‘crisis’ the correct term? The Oxford English Dictionary defines a crisis as ‘ a time when a problem, a bad situation or an illness is at its worst point’. From the Crest predictions, it is clear we have not even begun to hit the ‘worst point.’ Furthermore, a crisis can be defined as a period of ‘great danger’ – well, criminal justice was in a state of crisis long before Covid-19; from cuts to police officers and PCSOs to court closures throughout England and Wales. The Guardian reported in January 2019 that almost 50% of magistrates’ courts have closed and according to a report by the National Audit Office, the government plan to close another 77 courts by 2025/26. Is it no wonder that the backlog of cases is so large and continuing to grow.

As ever, it is the right to trial by jury that is the first fundamental freedom to be attacked. It always is. In 2018, Labour MP Ann Coffey suggested that we ‘do away with juries in rape trials’ in order to allow a trained judge, sitting alone decide the case Just this week, Simon Jenkins, writing for the guardian suggested that we abolish jury trials as the huge backlog of cases has allowed us to ‘reform our archaic and irrelevant court rituals.’ Jenkins suggests that after 3 terms as a juror he is convinced that they are a ‘costly indulgence’  and ‘have nothing to do with justice except often distort it.’ Additionally, he claims that his final case was a ‘blatant’ attempted murder case which involved young lawyers making mistakes, before the judge declared all relevant evidence ‘prejudicial’ and instructed the jury to acquit the defendant – quite how this has anything to do with the role or function of the jury is beyond me. But it perhaps goes some way to explain his misunderstanding about the role and its importance.

It came as no surprise this week to see Labour call for alterations to the jury system. Shadow Justice Secretary, David Lammy, called for juries to be reduced to 7 people to ‘stem the gravest crisis in the justice system since WWII‘. As highlighted above, Crown Court cases (not all will be heard by a jury because of guilty pleas) make up a fraction of this current and predicated backlog of cases. This is a marked shift from Lammy, who in his 2017 Review into the treatment of BAME individuals in the criminal justice system found that the ‘jury system was fit for purpose’ (see page 41). The system was already in a state of crisis – why suggest amendments now?

Furthermore, why would 7 people allow the backlog to be cleared any quicker – they still have to deliberate and properly consider the evidence they have heard and therefore are not likely to make the process any swifter. And if they are not going to be quicker – they will not help tackle the backlog. Writing in 2021 Dr. Hannah Quirk outlined the importance of juries and proffered a way forward to tackle the growing backlog. In her Criminal Law Review Editorial, she suggested that ‘juries may provide an important safety net against unfair prosecutions. The difficulties are immense but alternative measures should be tried, such as using university facilities or a purpose-built site. If convention centres could be turned into field hospitals in a few weeks, creating a functioning courtroom cannot be impossible. The medical profession is discovering unexpected long-term side-effects of Covid-19; the criminal justice system should ensure that the right to trial by jury is not another casualty of the crisis.’

If the criminal justice system was adequately funded (to provide opportunities to pursue a career in the CPS or defence professions), if courts were not closed and therefore unable to hear cases then that would provide a way forward to tackle the crisis. Perhaps the government ought to look to re-open the closed buildings they have not sold off or as Quirk suggests, repurpose existing buildings to be suitable for criminal trials.

Amending trial by jury will do little to reduce the backlog of cases, in fact it would be the start of a slippery slope and the death knell to jury trials in England. Following Quirk’s suggesting again,  we need to ensure that jury trials are not another casualty of the current crisis.

The Polluter Pays Principle: The only Principle that can limit aviation emissions (if we do it right)

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This blog was written by Mandy Beck, an LLM in Environmental Law and Sustainable Development student at UWE Bristol.

Today, an airplane takes off approximately every 0.8 seconds somewhere around the globe.[1] The impact of the aviation sector on the climate is enormous. Stefan Gössling, professor for sustainable transport at Lund/Linnaeus University, Sweden, even states that ‘on an individual level, there is no other human activity that emits as much over such a short period of time as aviation’.[2] Globally, the aviation sector contributes a total of 2.5%[3] to all anthropogenic[4] CO2 emissions, making it a significant contributor to global warming. Often undiscussed, however, are the non-CO2 effects, meaning those effects resulting from e.g. particles, water vapour, and nitrogen oxides. Together with these non-CO2 effects, aviation contributes to global warming by 5%.[5]

The International Air Transport Association estimates that the demand for flights is going to double by 2037.[6] The decision-makers in the aviation sector thereby face the challenge of making aviation climate-neutral. In 2012, former European Commissioner for Climate Action in the European Commission, Connie Hedegaard stated that the ‘Polluter pays is the only principle that can limit aviation emissions’.[7]

The Polluter Pays Principle (PPP) reflects an idea that is taught to us since our childhood: ‘Clean up after yourself’.[8] Due to this principle, the costs of pollution should be allocated to the actor who caused them.[9] The PPP is implemented by using market-based measures (MBMs), such as levies, emission trading (such as the EU Emission Trading System EU-ETS), and offsetting schemes. Implementing a MBM is necessary, as technical progress and operational measures alone will not be sufficient to limit climate emissions sufficiently in the aviation sector in the near future.[10]

The first international offsetting scheme for aviation, CORSIA[11], will be implemented step by step starting 2021. Doubts, however, remain as to the effectiveness of this MBM in the light of reaching the goals of the Paris Agreement.[12] Overall, the PPP could hold more potential in curbing aviation-caused climate emissions. The following improvements must, however, be made:

Inclusion of non-CO2 effects and removal of subsidies

Climate damages resulting from non-CO2 effects must be included in a MBM. Despite the major importance of non-CO2 effects, these effects are not included in CORSIA nor the EU-ETS. Secondly, the subsidies in the billions granted to airlines must be removed (e.g. grants for Etihad Airlines by Abu Dhabi; grants by the European Commission to Air Malta). Subsidies have an opposite effect than the PPP, as they falsify the costs that must be borne.[13] Also, due to subsidies, aviation has a competitive advantage over other – more sustainable – means of transport.

Full payment for all environmental costs until 2050

The polluter must fully pay for all environmental costs by 2050 to reach the 1.5°C Goal (2085 at the latest for the 2°C Goal). The price for one ton of CO2 in 2019 including all climate costs (CO2 and non-CO2 effects) is 371 Euro/ton CO2.[14] The price set under the EU-ETS today is much lower at approx. 30 Euro/ton CO2.[15]To achieve the goals of the Paris Agreement, the PPP can be implemented gradually (with increasing CO2 prices over time), however, the above-mentioned full payment to the given deadlines must be reached.

Implementation of the PPP at the beginning of the value chain

Currently, all MBMs that have been implemented address the airlines. However, making the fuel suppliers pay for subsequent environmental damages, holds one significant advantage: fossil fuel suppliers would lose their competitive advantage, due to not paying for climate damage, over renewable energy providers. If all suppliers include environmental damage in their pricing, the market conditions would be equal.


[1]Statista, ‘Number of flights performed by the global airline industry from 2004 to 2020’ (2020) <www.statista.com/statistics/564769/airline-industry-number-of-flights/> accessed 24 February 2020.

[2] Arthur Sullivan, ‘To fly or not to fly? The environmental cost of air travel‘ (2020) <https://www.dw.com/en/to-fly-or-not-to-fly-the-environmental-cost-of-air-travel/a-42090155> accessed 24 June 2020.

[3] Umweltbundesamt, Umweltschonender Luftverkehr: lokal – national – international (Umweltbundesamt Publikationen, 2019), 30.

[4] man-made.

[5] Malte Niklaß, Benjamin Lührs, Robin Ghosh, ‘A Note on How to Internalize Aviation’s Climate Impact of non-CO2 Effects’ <www.researchgate.net/publication/311788948_A_Note_on_How_to_Internalize_Aviation%27s_Climate_Impact_of_non-CO2_Effects> accessed 15 Mai 2020; equal conclusion reached in Jörg Larsson, Simon Matti, Jonas Nässén, ‘Public Support for aviation policy measures in Sweden‘ (2020) <https://doi.org/10.1080/14693062.2020.1759499> accessed 20 August 2020.

[6] IATA, ‘Annual review 2019’ (2019) <https://www.iata.org/contentassets/c81222d96c9a4e0bb4ff6ced0126f0bb/iata-annual-review-2019.pdf> accessed 11 February 2020,16.

[7] The Guardian, ‘Polluter pays’ is the only principle that can limit aviation emissions’ (2012) <https://www.theguardian.com/environment/2012/apr/04/polluter-pays-aviation-emissions> accessed 15 February 2020.

[8] David Boyd, ‘Clean up after yourself’ <www.theglobeandmail.com/opinion/clean-up-after-yourself/article773567/> accessed 10 February 2020.

[9] Philippe Sands, Jacqueline Peel, Adriana Fabra, Ruth MacKenzie, Principles of International Environmental Law (Cambridge University Press, 2018) 240.

[10] ICAO, Environmental Report 2019 – Chapter: Climate Change Mitigation: CORSIA (ICAO Publications 2019) 236.

[11] Carbon Offsetting and Reduction Scheme for International Aviation.

[12] That is holding the increase in the global average temperature to well below 2°C above pre-industrial levels.

[13] Stefan Gössling, Frank Fichert, Peter Forsyth, ‘Subsidies in Aviation’ (2017) 9(8) Sustainability 1295, 1295.

[14] Umweltbundesamt, Methodenkonvention 3.0 zur Ermittlung von Umweltkosten Kostensätze Stand 02/2019 (Umweltbundesamt Publikationen, 2019). UBA recommends the use of a multiplier of 2.0 for the transfer of the CO2 price to aviation emissions to include the non-CO2 effects.

[15] Michael Holder, ‘EU carbon prices surge to 14-year high’ <www.businessgreen.com/news/4017770/eu-carbon-prices-surge-14> accessed 23 July 2020.         

Pre-trial detention decision-making during the COVID-19 crisis: the urgent need for open justice

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In April 2020, Tom Smith, Senior Lecturer in Law at UWE Bristol, published a short article for criminal justice NGO Fair Trials, discussing the use of pre-trial detention during the Covid-19 emergency. The full post was written by Tom Smith and was first published on the Fair Trials website.

Whilst the COVID-19 pandemic has the majority of the world confined to their homes on lockdown, vital public services – most visibly healthcare – continue to operate in very difficult and risky circumstances. The criminal justice system is one such public service. Whilst most jurisdictions have made significant changes to their working practices in response to the pandemic, work must continue to ensure that justice is delivered fairly and effectively. An essential element of doing so is ensuring justice is seen to be done; this principle of open justice is crucial to a fair and effective justice system, but is currently under threat. In England and Wales (E&W), this is particularly so in relation to cases involving pre-trial detention (PTD), which are, at present, the main work of the criminal courts. The vast majority of cases deemed non-vital are currently not being heard, most notably in magistrates courts (in which all cases start and most cases conclude). HM Courts and Tribunals Service (HMCTS), which has been publishing daily operational updates, identifies ‘overnight custody cases from police stations’, ‘productions from prisons’, and ‘applications to extend custody time limits’ as the only work currently being conducted by the Crown Prosecution Service (which prosecutes most criminal cases). All involve PTD. Overnight custody cases are, in effect, the first appearance at court of someone charged with an offence. If detained by the police after charge, this must happen the next working day. Productions from prisons will also normally relate to a relevant time limit on PTD, such as the requirement for a defendant to be returned to court within 8 clear days after their first detention. Custody Time Limits (CTLs) apply to all cases involving PTD, and vary depending on the seriousness of the charge. If the limit expires, the defendant must be released on bail – hence the need to return them to court to extend a limit (which courts have the power to do). Other work is identified as continuing in magistrates courts, but the above will be the main case load currently being dealt with – and all involve, exclusively, PTD decision making. 

This is important for several reasons. There are no new jury trials; the Crown Court (the higher criminal trial court) will only cover urgent work. The senior courts, such as the Court of Appeal (which cover a fraction of the cases dealt with in trial courts) are similar. Therefore, dealing with PTD decisions are and will represent the primary day-to-day activity of the criminal courts system as a whole for the foreseeable future. This makes sense in the current situation, but raises questions about pre-existing issues related to PTD. For example, concerns have been raised about the brevity of PTD decision-making, lasting on average a few minutes. Set against a general atmosphere of ‘urgency’ both outside of and within the courts, this may be exacerbated. Similarly, previous concerns about limited reasoning for PTD decisions may be affected by the desire to work swiftly in the current circumstances. Both of the above may also be impacted by the now pervasive use of video link technology (VLT) to avoid the attendance of all parties at court. This is clearly justifiable for public health reasons and the safety of all involved; but this has also been implemented very quickly. VLT has been criticised in the past for not facilitating proceedings adequately in terms of quality, reliability and engagement of all parties involved (particularly defendants). In terms of speed and reasoning, one would hope that more time would be taken over VLT to ensure decisions are thorough and clear. But it might be argued that technology tends to enable and encourage us to do things more quickly. There is a risk this could deepen the problems above. 

The same might be said of disclosure of information and evidence in advance of PTD hearings. Defendants and their lawyers have previously reported consistently failing to be given full information prior to consultation and representation before a court on PTD matters. Lawyers would often receive such information shortly before or even during hearings, sometimes by physically being shown material in court. This may be even more problematic in the current circumstances if none of the parties are actually present in the same room. One must wonder whether remote conduct of PTD hearings will help or hinder defence lawyers in this regard; after all, sharing of evidence prior to the pandemic was done entirely electronically, and yet has consistently been a problem. It is also worth noting that it appears that most PTD decision making in the courts is currently being made by District Judges (DJs, professional judges) rather than a bench of lay magistrates (ordinary, legally untrained citizens). Previous research  has suggested distinct modes of practice depending on the decision-maker, with DJs tending to be quicker, but better in terms of reasoning. Some research has also shown a tendency of DJs to be more willing to detain defendants, though this has varied. Again, this factor could have some impact on PTD decision-making over the coming months. 

Aside from aggravating existing problems in PTD practice, the current situation creates new issues. It has been pointed out by many that it is imperative to reduce the use of detention generally (including PTD) for public health reasons. Keeping defendants out of custody where possible and lawful should be a priority. As such, decisions need to be well considered and not relapse into habitual ways of approaching cases. Previous research has shown PTD practice stubbornly resistant to change in many respects (with some exceptions); we must therefore hope that the long-term issues highlighted above do not restrict this important need to think differently about detention in light of Covid-19. It is hard to say how much of a problem the issues above will be; these suggestions are purely speculative, but that is for good reason. At present, in E&W, it is almost impossible for a researcher or the public to observe PTD decision-making in the courts: they are effectively inaccessible. HMCTS has announced ‘a range of measures to support the principle of open justice’, including: 

  1. access to open hearings if a public gallery is available 
  2. remote access for a third party 
  3. transcripts (if available) for any party or interested person 
  4. audio recording which can be listened to in a court building 
  5. notes of a hearing to be made available on request 
  6. access for accredited media  

On paper, this looks to be a good range of access to PTD decision making in the current difficult circumstances. In reality, they are arguably unfeasible. Numbers 1 and 4 are almost impossible in light of strong guidance to the public not to leave home unless it is essential. Number 2 will, effectively, depend on the goodwill and engagement of particular court staff to facilitate such access. Transcripts may not, in fact, be made and if requested, will depend on definitions such as ‘interested party’. Number 5 may not provide useful information to an observer since notes will not necessarily be comprehensive or reflect their interests. It is also worth noting that for none of the above is further information available on how one might pursue these routes of access. 

Number 6 is the only route that appears to be currently operational, but only to some extent. Some journalists have reported good access to proceedings via remote links. For example, Tristan Cork of the London Evening Standard reported on the bail hearing of Julian Assange (who had a bail request denied on the basis he might flee – a questionable decision in light of the extreme travel restrictions presently in place in the UK). However, this was a high profile case, likely to attract attention – unlike most PTD hearings. Moreover, most of the journalists reporting good access are London-based. It might also be added that many – including Cork – will now be on furlough due to Covid-19, like many members of the working public, and will therefore not be reporting on cases. As such, at present, it is unclear how accessible PTD decision-making is to the media, the public, or researchers. We might therefore ask – beyond the lawyers involved in cases, who is checking current practice? PTD decision-making directly affects the liberty of unconvicted persons and this will (and should) continue despite the various restrictions currently in place. However, the latter fact creates potential for lengthy delays to trials since none are being listed, and therefore much longer periods of detention for unconvicted defendants. It is very important to be able to properly scrutinise such decision making; a lack of scrutiny in any discipline enables (and in some cases encourages) poor practice to flourish.

All the above might be dubbed an overreaction, but the conviction of Marie Dinou has already proven the risks to be real. Dinou was approached by police at Newcastle Central train station and asked to account for her presence. She did not do so and was arrested on suspicion of an offence under the new Coronavirus Act 2020. She spent two days in custody before being brought to a court hearing; after failing to confirm her personal details, she was returned to the court cells, and was convicted in her absence without a lawyer. Dinou allegedly did not say a word on arrest; to her lawyer at the police station; or at court. It appears no mental health assessment was made of her, nor was it confirmed whether she spoke English. After persistent inquiry by journalists and lawyers via social media, it transpired that Dinou had been charged with a non-existent offence under the legislation, and therefore wrongfully convicted. This has now been set aside. As has been pointed out by lawyer Robin Murray, there appear to have been a catalogue of breaches of the Criminal Procedure Rules (which govern criminal court proceedings) and legislation relating to disclosure, compounded by a lack of legal representation and failure to confirm the defendant’s ability to comprehend proceedings. This case, however, bucks the trend of invisibility for most; it was a minor offence dealt with in a lower court, which are generally paid little attention. Yet Dinou spent two days in PTD, to be convicted incorrectly. This raises the very real possibility that this may already be happening across E&W (a jurisdiction with a comparatively robust PTD framework), and beyond; and with very limited access to the courts for external observers to scrutinise and question poor practice, there is real risk of not only unnecessary and excessive detention of unconvicted persons, but wrongful convictions. It is therefore imperative that access to external observation be realistically operationalised as soon as possible; and that practitioners ensure that thoroughness and care is taken in PTD decision-making in the admittedly very difficult – but, equally, medium-term – circumstances in which criminal justice now functions. 

From prisoner to paralegal: Morris Kaberia tells his story

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Lawyer and activist, Morris Kaberia, recently came to visit students at UWE Bristol to speak about his story of justice. After suffering an unwarranted 13 years, 5 of which were spent on death row, in Kamiti High prison, Morris was set free. With help from African Prisons Project, a programme that UWE Bristol Law students support through our Pro Bono unit, Morris studied for a Law degree whilst he was in prison and was able to use his newly learnt knowledge to fight his case for which he was wrongly accused.

Morris visited the University on Monday 10 February 2020 to deliver a talk to our students about his journey, experiences and advice. You can listen to the full talk recorded as a podcast.

Kathy Brown, Senior Law Lecturer, oversees the student participation in the African Prisons Project programme. She said: “Studying for a law degree has enabled the prisoners to gain a higher level of education, act as paralegals for other inmates and represent themselves in court. Many of them are given extreme sentences for relatively small crimes, such as being given death penalty for aggravated burglary, and are on remand for several years.”

In his impactful visit to UWE Bristol, Morris spoke about the importance of the project and how it inspired a new lease of life within himself and his fellow prisoners. He greeted current Law students to enforce the need for students to continue working with this project, and he also reconnected with students who helped him whilst he was in prison which was extremely powerful and emotional.

Morris was interviewed after his talk which you can watch below. Please note: Morris went to Kamiti prison, not community prison as mentioned in the subtitles.

If you would like to know more about our Pro Bono Unit please contact fblclinic@uwe.ac.uk.

Using as the Starting Point the Article ‘WTO Rules against EU “Anti-Dumping” Duties on Indonesian Biofuel’ by Natasha Burton in New Economy on 26 January 2018, Discuss the Use of Anti-dumping Measures by the EU on Biofuels

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Written by Chloe Barratt

This post (edited for publication) is published on our blog as part of a series of work produced by students for assessment within the module ‘Public International Law’. Following the blogging success over the last couple of years, we decided to publish our students’ excellent work in this area again in this way. The module is an option in the second year of Bristol Law School’s LLB programme. It continues to be led by Associate Professor Dr Noëlle Quénivet. Using innovative learning and teaching methods, Noëlle developed this module to include the use of online portfolios within a partly student led curriculum. The posts in this series show the outstanding research and analytical abilities of students on our programmes. Views expressed in this blog post are those of the author only who consents to the publication.

Anti-dumping duties are additional charges imposed by a state in response to the dumping of products into the ‘commerce of another country at less than the normal value of the products’ (Article VI GATT). They are a means of neutralising unfair trade practice, allowing states to protect their domestic industry if the dumping is having a negative effect on their economy. This blog will discuss how the European Union (EU) imposes anti-dumping measures on biofuels, a renewable source of energy that until recently was seen as an attractive alternative to fossil fuels. I will discuss how the issue that lies at the heart of the dispute with anti-dumping measures is, as Burton’s article highlights, how the extent of dumping is calculated. After examining the implications of anti-dumping measures, I will conclude that they are necessarily used to neutralise unfair trade practice and maintain economic and social stability within the EU.

Process of Bringing an Anti-dumping Measure

To ensure anti-dumping duties are imposed to counteract unfair trade practice, the process of imposing duties is heavily regulated. Accordingly, Article 1 of the  Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (ADA) requires all investigations to be initiated and conducted in accordance with the provisions of the ADA. Whilst the World Trade Organisation (WTO) does not regulate the initial act of dumping, it is responsible for regulating the process a state must follow when initiating an anti-dumping measure. If, for example, the EU believes products are being dumped into its market it must first be able to show that the dumping is taking place. In doing so it must be able to calculate how much lower the export price is in comparison to the home market price and show that it is causing injury or threatening to do so. The high threshold for establishing the injurious effect of the dumping accompanied by an investigation (see Article 5 ADA) seeks to ensure that anti-dumping duties are used productively.

Why Calculations of Anti-dumping Measures Have Proven Problematic

Whilst the process of imposing an anti-dumping measure is well regulated, the element of calculating the extent of dumping was highlighted as problematic in Burton’s article. As the EU explains in the Commission Implementing Regulation 2018/1570, following the rulings in Indonesia and Argentina (see para 8), the method of calculation has now been clarified in light of the ADA (for the original reports of the dispute settlement body, see Indonesia (DS480) and Argentina (DS473)). 

The dispute between the EU on the one hand and Argentina and Indonesia on the other (see history here) follows a number of WTO challenges to anti-dumping measures (see discussion in Crowley and Hillman, ‘Slamming the Door on Trade Policy Discretion? The WTO Appellate Body’s Ruling on Market Distortions and Production Costs in EU-Biodiesel (Argentina) (2018) 17 World Trade Review 195-213) where the underlying issue was how authorities adjusted the prices of exporting producers. For example, when constructing a home market price for Argentine biodiesel, that is the price of which biodiesel was sold in Argentina, the European Commission chose to alter the price of soybeans to compensate for the distortion in soybean prices, caused by an export tax imposed by the Argentine government (see Crowley and Hillman, at 2).  The price was adjusted based on the fact that soybeans, the primary input of biodiesel, were considerably below the international price and the Commission reasoned the adjustment was what ‘would have been the price paid… in the absence of the export tax system’.

The dispute with Indonesia was similar in the sense that it also involved a problem with  calculations: the EU had replaced the actual price of crude palm oil that was within the producers’ records with an international reference price. The price of the palm oil was lower than international prices, which meant the EU imposed higher duties on Indonesia in response to what they calculated the extent of dumping to be. When deciding on the trade disputes in the cases of Indonesia and Argentina, the Dispute Settlement Body for the WTO found the EU had indeed acted inconsistently with both GATT 1994 and ADA.

Therefore, whilst there has been a period of uncertainty in calculating the extent of dumping, this imperfection has now been clarified by the WTO. The clear guidance now states that countries are not legally permitted to take government manipulated price control into account.

Social and Economic Stability 

Since the WTO cannot regulate the act of dumping, the ability for a state to impose ‘remedial and not punitive’ measures in response to dumping are essential to nullify unfair trade practice. The measures imposed by the EU on biofuels have been used to counteract the great harm that dumping poses to the economic and social stability of the EU. 

Biofuels being dumped into the commerce of the EU not only disrupts the trading of the fuels but also distorts the standard value of the commodity. EU producers are faced with unfair competition and in considering the vast difference in Indonesia’s access to the raw materials used for biofuels (i.e. palm oil) in comparison to the EU’s access,  the EU could not physically be expected to meet the competitors’ low price without a substantial economic loss. The subsequent effect on the domestic economy could see a closure in business and vast unemployment, which the EU is able to avoid with anti-dumping measures.

Conclusion

In summary, anti-dumping measures by the EU have been imposed to minimise the economic disruption caused by the dumping of biofuels. Whilst the EU was found to have miscalculated the extent of dumping, this was recognised and rectified by the WTO dispute settlement mechanism which in turn acknowledged the lawfulness of anti-dumping measures as such. Overall, these measures have been used productively to counteract unfair competition. 

‘Who Cares?’ play comes to Bristol Law School

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The play ‘Who Cares’ was performed in the Faculty of Business and Law at UWE Bristol on 28 January 2020. It was a piece of social theatre which depicted a family in crisis and the delicate and difficult issues and decisions that might lead to a young child’s adoption.

Following the eight scenes, there was a question and answer session with the cast in role, and a facilitated discussion between the actors and the audience. This allowed the audience to interact with professionals and actors alike, helping them to gain a fuller understanding of the issues and the consequences of family proceedings for the family and professionals involved. Many of the audience were students, parents and grandparents. Many were family justice professionals. Others represented charities supporting people in the midst of a family crisis, facing homelessness or trying to address such issues as drug and alcohol misuse, and domestic abuse.

The engaging script was written by His Honour Judge Stephen Wildblood QC, the Designated Family Judge for wider Bristol area comprising 5 local authorities. He also took on the role of the Judge in the play. The performance and discussion highlighted the vital work of the Family Court, aiming to ‘show not tell’ the audience the kinds of issues that were considered there every day and how they might be resolved. HHJ Stephen Wildblood QC explained the impact of austerity and the current lack of funding on families and suggested that a preventative approach could help to avert family crises and court intervention. He pointed out the benefits of networks and charities such as The Nelson Trust which supported this production.

The play was presented in collaboration with The Nelson Trust and Gloucestershire Children’s Services’ Social Work Academy. The production was sponsored by Albion Chambers, Family Law Week and Bristol Resolution and it was performed by professional actors at ‘What Next Theatre’.

The play was brought to UWE Bristol by Senior Lecturer in Law, Emma Whewell, who is also on the steering committee of a Family Law Theatre initiative. Emma is one of two academics to sit on the Local Family Justice Board in Bristol and is currently in the process of organising a conference for the Local Family Justice Board to take place at UWE Bristol on 14th May 2020.

Insights from the UK’s Implementation of Key Anti-Money Laundering Obligations

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Blog written by Samantha Bourton, Lecturer in Law at UWE Bristol.

Photo: Samantha Bourton

Money laundering refers to the process used by criminals to conceal or disguise the profits of their illegal activities and is known to have devastating effects on society, national security, the economy and the integrity of financial institutions. This is because money laundering potentially enables criminals, such as drug traffickers, terrorists, and tax evaders, to remain undetected and to channel their profits into further illegal activities. The United Nations Office on Drugs and Crime estimates that 2-5% of global GDP is laundered each year, while the National Crime Agency estimates that hundreds of billions of pounds are laundered annually in the UK alone. Accordingly, an international legal framework has been developed to combat this financial crime, with almost all countries globally committed to implementing the Financial Action Task Force (FATF) Recommendations on Combatting Money Laundering and the Financing of Terrorism.

The EU has implemented the Recommendations via a series of directives and has introduced its own measures to combat money laundering in the wake of the Panama Papers and recent terrorist attacks in Europe. One of the main innovations of the EU directives is the requirement for Member States to set up registers of the beneficial owners of legal entities and trusts. The fifth EU anti-money laundering Directive requires the information contained in the register of legal entities to be available to the public, while the register of trusts should be available to law enforcement authorities and those who can demonstrate a legitimate interest in the information. The aim of such registers is to reveal the identities of those who use companies to launder money and carry out illegal activities.

On Friday 29th November, I delivered a paper titled ‘Insights from the United Kingdom’s Implementation of Key Anti-Money Laundering Obligations’ at the CFE Tax Advisers 12th European Conference on the Tax Advisers’ Professional Affairs in Paris. The Conference aimed to examine the impact of the fifth European Union (EU) Anti-Money Laundering Directive, which Member States were required to transpose by the 10th January 2020. The speakers included representatives from the CFE, OECD, and the BASEL Institute on Governance, as well as legal practitioners and academics from several Member States.

My paper examined the UK’s implementation of some of the key obligations contained in the 4th and 5th EU Anti-Money Laundering Directives, including the inclusion of tax evasion as a predicate, or underlying, offence to money laundering and the introduction of beneficial ownership registers. The paper focused on the UK as a case study, as these measures were part of its legal framework long before they became an obligation within the EU; tax evasion has been a predicate offence to laundering in the UK since 1993 and the UK established the first publicly accessible beneficial ownership register in the G20, the People with Significant Control (PSC) Register.

The paper highlighted the benefits generated by these developments in the UK. Under the anti-money laundering legal framework, professionals in the regulated sector are required to submit reports, known as suspicious activity reports (SARs), to the National Crime Agency when they know or suspect that a client is engaged in money laundering. With the inclusion of tax evasion as a predicate offence to laundering, in the UK, professionals are required to submit SARs when they know or suspect that their clients are engaged in tax offences. This has led to a significant recovery of revenue, with the intelligence generated by the reports supporting the collection of over £40.2million in tax revenue from civil enquiries in 2018-19. The paper also highlighted research undertaken by the NGO Global Witness on the benefits of the UK’s PSC Register in detecting and preventing criminal activity. For example, Global Witness found that there has been an 80% reduction in the rate of incorporation of Scottish Limited Partnerships (SLPs) since SLPs have been subject to beneficial ownership requirements. SLPs are often associated with financial crime and were used in the Russian and Azerbaijani Laundromats.

However, the paper also cautioned against the implementation of these measures without appropriate resources devoted to their enforcement, or guidance provided on their operation. The information contained in the UK’s PSC register is not currently verified, leading to the inclusion of inaccurate and misleading information. This has caused some law enforcement authorities in the UK to refrain from using the register in investigations, effectively defeating its objective. In addition, the paper identified the difficulties professionals face in complying with the obligation to submit SARs for tax offences in the UK and stressed how these problems are likely to be exacerbated when these obligations are imposed at a European level.

I concluded the paper by recommending that the EU should define tax evasion for the purposes of the EU anti-money laundering directives and should provide further guidance on how Member States should verify the information contained in beneficial ownership registers.