UK Economic Crime Group: Enforcement Update

Executive Summary

In this edition of our Enforcement Newsletter, we provide an update on recent economic crime matters in the UK. 

We consider the following enforcement updates relating to the Serious Fraud Office (SFO), National Crime Agency (NCA), the Office of Financial Sanctions Implementation (OFSI), and Her Majesty’s Revenue and Customs (HMRC):

• The SFO’s updated guidance on Corporate Cooperation and Deferred Prosecution Agreements
• The SFO announcing new investigations into Rockfire Investment Finance Plc and AOG Technics
• The SFO charging United Insurance Brokers Limited with bribery offenses in Ecuador
• The UK, France, and Switzerland announcing the new anti-corruption alliance
• The first UK criminal convictions for Russian sanctions breaches
• Updates on OFSI’s annual report for 2023-2024
• Proposals to introduce a “failure to prevent economic crime” offense
• HMRC’s introduction of a U.S.-style Whistleblower Reward Program
• Recent data revealing the increase in fraud in the UK

As part of our social commentary, we consider the recently enacted Water (Special Measures) Act 2025, which aims to strengthen regulatory oversight of the UK’s water industry.

SFO Issues Updated Guidance on Deferred Prosecution Agreements

On April 24, 2025, the Serious Fraud Office (SFO) released updated corporate guidance and elaborated on the circumstances in which corporates may be invited to negotiate a Deferred Prosecution Agreement (DPA) instead of facing criminal prosecution.

The updated guidance has clarified that, unless exceptional circumstances apply, the SFO will invite a corporate to negotiate a DPA if it has self-reported “promptly” and cooperated “fully.” While the SFO has stated that a prompt self-report will be considered a “strong factor” to indicate cooperation, “self-reporting” and being “cooperative” will not be considered the same. On that basis, the SFO may consider inviting a corporate to negotiate a DPA if it has not self-reported but has provided “exemplary cooperation.”

The guidance sets out a non-exhaustive list of examples of cooperative conduct and states that a corporate taking all of the steps listed would likely be considered as displaying “exemplary” cooperation. Nevertheless, it remains unclear what the SFO would consider “full” cooperation and whether there would be any practical difference between that and exemplary cooperation.

The examples of cooperation in the guidance include: (i) corporates proactively preserving all digital and hard copy material likely to be relevant to the SFO’s investigation, (ii) collecting and identifying documents relevant to the investigation, and (iii) presenting the facts on the suspected criminal conduct. The scope of these requirements is broad and raises questions about the feasibility of meeting these expectations, especially given the time pressure to self-report “promptly.”

From the list of examples provided, it appears that the SFO would seek to use a self-report as a springboard directly into an investigation and utilize the information provided therein to dispense with undertaking its preliminary investigative steps of obtaining data and identifying key individuals. Any attempt to display exemplary conduct would likely impact the assertion of Legal Professional Privilege (LPP). While the SFO has clarified that it will not penalize a corporate for asserting LPP over material, it will interpret a waiver of privilege as a “significant cooperative act.” The SFO’s stance on LPP will undoubtedly leave corporates in a challenging position when considering whether to utilize this important protection.

It remains unclear what is to be considered a “prompt” report, and the SFO has offered little explanation for how it will interpret this term in practice. Guidance may be taken from the SFO’s explanation that failing to notify the suspected offending within a “reasonable time of it coming to light” will be a specific factor in favor of prosecution. However, ambiguity arises; the SFO has stated that “reasonable time” will depend “on the circumstances” and that the agency also recognizes that a corporate may consider it necessary to undertake an internal investigation first. It therefore appears that, for now, the SFO will be assessing “prompt” reporting on a case-by-case basis. This is not particularly helpful given that: (i) a prompt report is a key factor in order to be considered eligible for DPA negotiations; and (ii) the requirements that the SFO has set as to what a self-report contains and what would be considered cooperation, will inevitably add to the time it takes for corporates to self-report.

A further, and notable, takeaway from the guidance is the SFO’s commitment to faster investigation timelines. The guidance states that within 48 business hours of receiving a self-report or other credible contact, the SFO’s Intelligence Division will initiate engagement with the corporation. The agency will then aim to decide whether to open a formal investigation within six months and, if DPA negotiations follow, conclude them within another six months. These deadlines are ambitious and reflect recent commentary by the SFO’s Director, Nick Ephgrave, of the agency’s goal to fast-track investigations and enforcement actions.

The new guidance has assisted in confirming the criteria that the SFO will apply when determining whether to invite a corporate to partake in DPA negotiations. It therefore provides some certainty to legal advisors and their clients when considering a self-report and navigating potential prosecution. That said, the guidance does not go far enough to explain what is considered to be “prompt,” and the SFO has laid out a series of non-exhaustive examples of cooperation that could present a challenge for corporates to meet in a timely fashion. As a result, whether the guidance will provide enough confidence to lead to an increase in self-reports and, in turn, DPAs, is uncertain. However, it does appear that the SFO has a renewed appetite for DPAs (against the backdrop of its last DPA being in 2021) and seeks to adopt an alternative to prosecution as part of its overall strategy to resolve investigations more effectively and efficiently.

SFO Announces New Investigations into Rockfire Investment Finance Plc and AOG Technics

On June 3, 2025, the SFO announced the commencement of an investigation into Rockfire Investment Finance Plc (Rockfire). This follows the bankruptcy of Thurrock Council in December 2022, which had invested millions of pounds into a renewable energy bond scheme sold by the Rockfire Group. The SFO suspects Rockfire of committing fraud against Thurrock Council and, as part of its investigation, has issued Section 2 notices to compel “financial institutions to provide information on its newly opened investigation.” The SFO has not revealed any further details as to the specifics of its allegations, nor indeed the recipients of the Section 2 notices. Separately, Thurrock Council commenced proceedings in the High Court last year against the founder of Rockfire and Rockfire Capital Limited – another entity within the Group. The Council is seeking to recover alleged misappropriated funds and has made claims that it was deliberately misled by the Defendants as to the value of its investments. The High Court action may helpfully provide some insight into the concerns of the SFO and its motivations for utilizing its Section 2 powers.

The announcement of the investigation into Rockfire comes amid a period of increasing activity by the SFO. On May 28, 2025, further to a joint investigation with Portuguese authorities, the SFO charged a Director of UK-based AOG Technics Limited (AOG Technics) – a company specializing in the sale of parts for freight and commercial aircraft – with an offense of fraudulent training. The SFO has alleged that from 2019 to 2023, AOG Technics defrauded customers by falsifying documents relating to the “origin, status or condition of aircraft parts.” The SFO’s investigation, which commenced on December 6, 2023, followed broader inquiries by the UK, EU, and U.S. aviation authorities that same year into safety concerns surrounding AOG Technics’ products.

The Rockfire and AOG Technics cases are examples of the SFO’s renewed commitment to improving the efficiency of its investigations. The simultaneous announcement of the Rockfire investigation and the issuance of Section 2 notices underscore the agency’s commitment to accelerating the pace of its enquiries. Meanwhile, the AOG Technics decision highlights the increasing trend of the SFO’s collaboration with international enforcement bodies and its growing cross-border intelligence capabilities, which, for relevant cases, will hopefully shorten the timeframe from the commencement of an investigation through to a decision on charge.

The Serious Fraud Office Charges United Insurance Brokers Limited with Bribery

On April 17, 2025, the SFO announced that United Insurance Brokers Limited (UIBL), an insurance and reinsurance broker, had been charged with failing to prevent bribery.

The SFO alleges that between October 2013 and March 2016, UIBL’s US-based intermediaries paid bribes to Ecuadorian officials to secure re-insurance contracts with state insurers worth US$38 million and that UIBL received US$6.2 million in commissions, of which US$3 million was paid to intermediaries.

The SFO is applauding the charges as potentially being the first case of failure to prevent bribery to be heard before a jury. While it remains to be seen whether UIBL will indeed progress to a trial, the charges are an example of the SFO’s renewed efforts to kickstart the agency’s enforcement activity, following heavy criticism in recent years for its reduction in investigations and charging decisions.

The case of UIBL is ultimately a stark reminder of the jurisdictional reach of the Bribery Act 2010 and the prudent need for UK companies to maintain documented and effective anti-bribery policies and procedures governing all aspects of their operations and supply chain, which are not merely put in place but are robustly and rigorously implemented on the ground.

The UK, France, and Switzerland Announce Anti-Corruption Alliance

On March 20, 2025, the SFO, France’s Parquet National Financier (PNF), and the Office of the Attorney General of Switzerland (OAG) formally announced the creation of a joint taskforce to strengthen cooperation in future investigations and the prosecution of transnational bribery and corruption offenses. The taskforce intends to formalize and strengthen existing collaborations, coordinate joint casework, and facilitate the sharing of insight and expertise.

In a mission statement governing the taskforce, the agencies pledged to deliver: (i) a Leader’s Group focused on the regular exchange of insight and strategy; (ii) a Working Group, to devise proposals for co-operation on cases; (iii) increased best practice sharing to make full use of combined expertise; and (iv) a strengthened foundation for seizing opportunities for operational collaboration.

The SFO, PNF, and OAG have a long-standing relationship, having previously collaborated on high-profile bribery settlements, including the Rolls-Royce and Airbus DPAs. Similarly, in November 2024, a joint investigation was launched between the SFO and PNF into the Thales Group (a Paris-headquartered defense and technology company with a UK subsidiary) concerning allegations of bribery and corruption. The new taskforce builds upon the existing track record involving the joint efforts of these agencies. It will likely result in an increase of cross-border investigations alongside greater intelligence and data sharing capabilities. The involvement of only three agencies does, however, raise questions as to the broader global impact of the initiative, which may prove to be more symbolic than substantive. For now, the taskforce remains a positive indicator of European intent, with its real impact only becoming measurable through future coordinated enforcement actions.

The First UK Criminal Convictions for Russian Sanctions Breaches: Dimitrii and Alexei Ovsyannikov

On April 9, 2025, Dimitrii Ovsyannikov, a former Russian government minister, and his brother Alexei Ovsyannikov were convicted of multiple breaches of the UK’s Russian financial sanctions regime. The case, brought jointly by the National Crime Agency (NCA) and the Crown Prosecution Service, marked the first successful prosecution for breaches of the Russia Regulations. This landmark case underscores the UK’s strong commitment to enforcing sanctions and using criminal law where appropriate to address attempts to evade sanctions imposed on designated persons.

Background and Details of Breaches

Dimitrii Ovsyannikov held senior positions in the Russian government, including serving as the governor of Sevastopol in Russian-occupied Crimea. He was sanctioned by the European Union in November 2017 (while the UK was still a member), and he remained a designated person (DP) under the UK’s autonomous sanctions regime post-Brexit. Although Dmitrii was removed from the EU’s sanctions list in February 2023 following a successful court challenge, he continued to be sanctioned by the UK.

In January 2023, following his departure from the Russian government, Dimitrii Ovsyannikov obtained a British passport and relocated to the UK. Upon arriving, he was successfully able to open a new bank account despite being sanctioned, reportedly due to an employee of the bank mistakenly assuming that Dimitrii’s delisting by the EU meant he was no longer under UK sanctions. The bank took 18 days to identify that Dimitrii remained sanctioned in the UK. During the trial, it was suggested that variations in the spelling of his name may have caused confusion. This delay triggered compliance reporting to the Office of Financial Sanctions Implementation (OFSI) and the ensuing NCA investigation.

During the period when Dimtrii’s account was not frozen, he received bank transfers from his wife totaling £76,000 and attempted to purchase a Mercedes-Benz worth £54,000. After his bank account was frozen, Dimitrii’s brother, Alexei, allowed him to use his credit card and paid private school fees for Dimitrii’s children.

The UK’s Russia sanctions prohibit dealing with funds or economic resources owned, held, or controlled by a DP, or making such assets available to or for the benefit of a DP. It is also prohibited to enter into arrangements designed to circumvent these restrictions. In a preliminary ruling, the trial judge confirmed that proving that the sanctions had been successfully circumvented was unnecessary. The focus was on the intent behind the actions and whether they could have resulted in a breach if carried out.

Dimitrii Ovsyannikov was found guilty of eight counts of intentionally participating in activities that would knowingly breach UK sanctions. These included receiving payments into his UK bank account and entering into an arrangement with his brother, Alexei, to purchase and insure a car. Dimitrii was sentenced to 40 months in prison. He was also found guilty of two counts of money laundering for handling the proceeds of his sanctions violations, although no separate sentences were imposed for these offenses.
Alexei Ovsyannikov was found guilty of two counts of intentionally participating in activities that would knowingly breach UK sanctions. These charges stemmed from his payment of private school fees for Dimitrii’s children. Alexei received a 15-month suspended prison sentence.

Significance and Implications of the Case

The case represents a significant milestone in the UK’s enforcement of Russian sanctions, with a criminal conviction reinforcing the strength of the regime and restoring some deterrence credibility after prior criticisms of weak enforcement. It provides clearer guidance on the factors that would warrant a breach being referred for criminal prosecution. Both OFSI and the NCA have prioritized tackling circumvention, and the involvement of family members in facilitating Dimitrii’s sanctions evasion was considered an aggravating factor during the trial.

The case also highlights the risks for banks in failing to conduct adequate screening checks. It underscores the importance of ensuring staff are properly trained and experienced in interpreting screening results to identify potential risks. Financial institutions must also ensure their tools can capture variations in names or close matches to prevent errors that could inadvertently facilitate sanctions violations. While it remains to be seen whether the bank will face separate penalties from OFSI for its shortcomings, its full cooperation and prompt reporting will likely be considered a mitigating factor in OFSI’s assessment. This cooperation played a crucial role in enabling the successful prosecution, further emphasizing the critical role financial services firms play in providing valuable intelligence to combat sanctions breaches.

Updates on the Office for Financial Sanctions Implementation’s Annual Report

On March 21, 2025, the UK’s OFSI published its latest Annual Review, which revealed an increase in investigations over the past financial year. OFSI reported that a record 208 cases were “allocated for investigation” in the year leading up to April 2024, an increase from 172 cases the previous year. Notably, nearly a quarter of these new probes were reported from sources other than voluntary self-reports, indicating improvements in OFSI’s intelligence gathering capacity.

OFSI’s investigations stem from a variety of sources, including voluntary disclosures, referrals from regulated entities, media reports, and open-source intelligence. While most of OFSI’s 396 recorded cases in 2023–24 originated from self-reports (288 cases), a growing proportion (108 cases) were attributed to alternative sources. OFSI highlighted this trend as evidence of its transition to a more proactive, intelligence-led enforcement model, aimed at identifying sanctions breaches without solely relying on voluntary disclosures.

The majority of suspected breaches relate to financial services, with 225 probes. Legal and professional services followed with 60 cases. Other industries, such as manufacturing and maritime, saw fewer than 10 cases each. However, OFSI stated that these sectors will also likely face greater scrutiny from the UK’s recently established trade sanctions enforcer, the Office of Trade Sanctions Implementation.

OFSI also reported an increase in case closures. The enforcement team closed 242 cases in the year leading up to April 2024 – more than triple the 74 cases closed the previous year. This increase was facilitated by the growing use of warning letters. The agency stated that using warning letters has allowed it to “close cases more quickly” and prioritize cases with greater impact. OFSI closed 19 cases where it found a breach but only issued a warning letter, including one case that was referred to another regulator, and 133 cases that were closed without a finding of breach.

In the years following Russia’s invasion of Ukraine and the expansion of the UK’s Russia sanctions, OFSI was flooded with licensing requests – over 1,200 in 2022 – diverting focus and resources away from enforcement, which was limited during that period. However, by March 2024, the licensing caseload had dropped to under 550. This reduction has allowed OFSI to reallocate resources toward intelligence-gathering and proactive investigations, with the agency indicating that a number of enforcement cases are expected to result in a public outcome in 2025. The recent enforcement action against Herbet Smith Freehills offers an early indication of this. OFSI will be judged against its high expectations for enforcement outcomes in the year ahead.

Proposals To Extend “Failure to Prevent” Economic Crime Offense to Professional Services

On March 18, 2025, Baroness Margaret Hodge, the UK’s anti-corruption champion, called for the government to reform how professional service providers are regulated and to introduce a new criminal offense that holds providers criminally liable for failing to prevent economic crime.

Speaking at a public event, Baroness Hodge outlined her vision for the government’s next anti-corruption strategy. Central to her proposal is tighter oversight of professional service providers who, whether directly or indirectly, enable money laundering and kleptocracy. She called for a “failure to prevent” offense aimed at holding these “enablers” criminally liable if they fail to prevent these economic crimes, hoping that this will serve as a powerful tool for promoting behavioral change. She criticized current professional supervisory bodies, including those that regulate the legal and finance sectors, for failings partly due to the conflict between their roles as both regulators and representative organizations.

This proposal comes at an interesting time politically, particularly in light of the government’s ongoing considerations of stimulating UK growth and investment. In this vein, finance and corporate trade bodies recently issued a statement urging the government to reduce and simplify the regulation of auditors, removing unnecessary burdens in order to make business in the UK less restrictive. The balancing act between easing restrictions across professional sectors, along with ensuring the UK remains robust in its approach to tackling corruption, will no doubt present challenges while decisions to reform are taken.

We have written previously about the proposed transition of the Financial Reporting Council into the Audit, Reporting and Governance Authority, which, although delayed, is intended to be a singular regulating body for auditors. Similarly, Baroness Hodge pointed toward growing support for consolidating regulatory oversight, particularly in relation to anti-money laundering compliance within the legal profession. It may be that the trend toward single-bodied oversight is something that will be explored in more depth as consultations for reform continue.

The government is due to publish its anti-corruption strategy this year. It is expected to draw on wide-ranging expertise, including from the private sector and academia, to develop a single UK response to tackling corruption. Whether this strategy extends the “failure to prevent” offense to professional services providers remains to be seen.

HMRC Launches U.S.-Style Whistleblower Reward Program to Crack Down on Tax Evasion

Later this year, HM Revenue & Customs (HMRC) is set to introduce a new whistleblower reward scheme inspired by similar schemes operated by tax authorities in the United States and Canada. The proposed scheme intends to complement HMRC’s existing reward policy, which is governed by Section 26 of the Commissioners for Revenue and Customs Act 2005.

The operation of the existing scheme is discretionary, and a reward is not linked to the amount of tax collected. As a result, little is known about how many reports HMRC receives from whistleblowers, the total amount of rewards issued, and their individual value. While further details of the new scheme are yet to be announced, the program is set to target “serious non-compliance in large corporates, wealthy individuals, offshore and tax avoidance schemes.” It will reward whistleblowers based on additional revenue collected.

To incentivize individuals to report suspected tax avoidance, the new scheme will likely increase the reward package on offer. This raises the question of how akin the scheme will be to the one offered by the Internal Revenue Service (IRS) in the United States, which pays informants between 15% to 30 % of the tax collected. These percentages have previously led to significant awards being made to whistleblowers. For example, in the 2022 to 2023 financial year, the IRS paid the equivalent of £67 million to 121 whistleblowers, the average reward being £554,000 per whistleblower. These sums stand in stark contrast to the figures released by HMRC from the same financial year, in which it was reported that a total of £978,256 was paid out.

While the scheme intends to target “serious non-compliance,” it remains to be seen how HMRC will seek to define this term and implement it in practice. Nevertheless, in order to target such cases of significant tax avoidance, HMRC may draw influence from the Canada Revenue Agency, which requires that a whistleblowing report must lead to at least CAD$100,000 of tax collected before being eligible for an award.

The announcement of the scheme comes at a time when other enforcement agencies are also looking to implement whistleblower incentive schemes. The Serious Fraud Office is presently considering the implementation of a whistleblower scheme akin to those operated by the U.S. Securities and Exchange Commission and the U.S. Department of Justice. Though it is highly unlikely that any whistleblower scheme implemented in England and Wales will make payments similar to the significant amounts paid under the various U.S. whistleblower programs, reforming the current HMRC reward system will help entice more reporting of suspected tax avoidance. This will certainly affect corporates, requiring many to review the protections offered in their employment contracts with respect to non-retaliation and confidentiality, while also ensuring that there are robust internal reporting and whistleblower policies in place.

Recent Data Reveals the Increase of Fraud in the UK

Cifas, the UK’s leading fraud prevention service, has recently released statistics showing that fraud in the UK has reached record levels. According to the latest annual report, published on April 3, 2025, a record 421,000 cases were filed to the National Fraud Database in 2024, a 13% rise from the previous year and the highest number on record.

The data indicates that identity fraud remains the most dominant form of crime, with perpetrators increasingly favoring impersonation tactics to scam victims. Moreover, false applications saw a 10% rise, largely driven by the creation of fake documents. These cases were particularly common in the banking and insurance sectors, which together represented 69% of filings. The statistics highlight the growing use of artificial intelligence (AI) to generate fake documentation, with some capable of passing standard verification checks and thereby increasing the difficulty for organizations to detect fraud. The financial sector is under increased pressure to safeguard against such risks with the Financial Conduct Authority repeatedly emphasizing the need for regulated firms to maintain adequate systems and controls which includes ensuring the implementation of systems that are resilient to the growing threats of generative AI.

The Cifas statistics separately reveal that frauds committed by insiders of a company remain a persistent threat, with more than 250 cases reported in 2024. This risk poses a unique challenge to corporates, with many choosing to implement robust whistleblowing procedures and escalation and reporting systems, which play a crucial role in exposing wrongdoing. Looking ahead, we are likely to see organizations investing more in initiatives and policies that strengthen internal monitoring and promote accountability among employees at all levels of seniority.

Social Commentary 

The Water (Special Measures) Act 2025: Strengthening Oversight of the UK Water Industry

On February 24, 2025, the Water (Special Measures) Act 2025 (the Act) received Royal Assent, marking a significant step in the UK’s ongoing efforts to tackle the environmental challenges posed by the water industry. This legislation gives regulators stronger powers to enforce environmental standards, addressing issues such as the discharge of raw sewage and water pollution, which have deteriorated in recent years. The problems have been linked to long-term underinvestment in infrastructure by water companies.

The Act introduces a range of new measures aimed at improving accountability, enhancing regulatory oversight, and ensuring that water companies are held responsible for environmental and consumer failings. Below are some of the key provisions of the new legislation:

1. Power to Dock Bonuses

A major feature of the Act is the ability for Ofwat, the UK’s water regulator, to implement rules governing the pay and governance structures within water companies. One of the most notable provisions is the linking of senior management bonuses to specific performance standards, including consumer protection, the environment, criminal liability, and financial resilience. If water companies fail to meet the specified standards, Ofwat has the power to require companies to recover performance-related bonuses already paid.

2. Lower Standard of Proof for Certain Offenses

Another significant reform introduced by the Act is the lowering of the standard of proof for certain environmental offenses committed by water companies. Previously, offenses such as pollution or unlawful discharges were subject to the criminal standard of proof, which requires that guilt be proven “beyond reasonable doubt.” Under the Act, however, the standard is reduced to the civil standard of “on the balance of probabilities.” This change allows for quicker enforcement and penalties by the Environment Agency (EA), making it easier to hold water companies accountable for breaches.

3. Automatic Penalties for Offenses

The Act also introduces automatic penalties for certain environmental breaches by water companies, thereby streamlining the process for imposing fines. The specific offenses subject to these automatic penalties will be detailed in secondary legislation.

4. Enhanced Powers to Combat Obstruction of Investigations

The Act strengthens the legal framework for tackling obstruction of investigations into criminal offenses by water companies. Courts will now have the power to issue prison sentences for offenses relating to obstruction of investigations carried out by the EA. Previously, such offenses were only subject to fines. Additionally, relevant officers of water companies can now be held personally accountable if the obstruction is attributed to their consent, connivance, or neglect.

Conclusion

The Act represents a significant shift in the UK’s regulation of water companies. By increasing the accountability of water companies and empowering regulators with stronger enforcement tools, the Act aims to ensure that companies uphold their responsibilities to consumers and the environment.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.