Business and the law in 2019

Aziz Rahman is founder of Rahman Ravelli

As another year begins, Aziz Rahman of business crime solicitors Rahman Ravelli considers some of the legal issues that may prove to be important in 2019.

Now we are in a new year, there is the temptation among many to make predictions. But this article isn’t going to stick its neck out and make any bold claims for the future. It just wants to highlight some of the legal issues that could affect business in 2019.

Towering above them all is, of course, Brexit. Whatever the precise terms of a deal – or the consequences of a no deal – end up being, Brexit could have a seismic effect on business. That could be the case even if a company is solely based in the UK and does not trade abroad. Plenty of articles have been written about Brexit so I will not dwell on it. But issues such as employment, tax, migration, exports and mergers and acquisitions are just a handful of the business-related matters that could be dramatically affected by any UK separation from the European Union.

The UK’s proposed EU exit has already caused problems when it comes to business crime. Last year, the Irish Supreme Court declined to extradite a man to the UK under the European Arrest Warrant Scheme – even though he had been convicted here of tax fraud – on the grounds that by the time he finished his sentence the UK would be out of the EU. The European Court of Justice has since stated that a country’s intention to withdraw from the EU cannot justify a refusal to execute a European Arrest Warrant. But it is extremely unlikely that this will be an isolated case. Interpretations of what could become a rapidly-changing, post-Brexit legal landscape for business may leave many in requiring specialist advice to represent their interests.

But many in business may also need advice on matters that do not extend beyond the UK.

For example, 2019 could be the year that the government properly enforces its desire for greater openness regarding beneficial ownership of companies. The Small Business, Enterprise and Employment Act 2015 led to a register of beneficial ownership of UK-registered companies being set up. But many companies are registered to so-called “company factories’’; which are addresses with no connection to their real owner. With the UK government intending to have a register of beneficial ownership of foreign companies operational by 2021, it is hard to see how this could be any more genuine than the current UK company register unless the authorities take steps to compel companies to declare their real beneficial owners.  If that happens, many companies may need help when dealing with the authorities.

Last year saw the first unexplained wealth orders (UWO’s) being issued. Introduced by the Criminal Finances Act 2017, the authorities can use a UWO to compel a person to explain how they came to possess assets if they suspect that person does not earn enough legitimately to have bought them. Although a relatively new tool, the UWO is likely to become increasingly popular as the authorities look to identify corrupt gains – an approach that could see many in business having to account for their wealth.

This year could be especially crucial for the Serious Fraud Office (SFO). With its new Director Lisa Osofsky starting her first full year in office and pledging to speed up the decision-making process regarding prosecutions, 2019 will tell us much about the SFO’s future direction.

As I write this, a trial of four Barclays executives is starting, following an SFO investigation. The December collapse of the trial of two Tesco executives charged with fraud and false accounting, last year’s failure of the SFO’s case against Barclays – as opposed to the current trial of its executives – and its inability in 2016 to convict brokers accused of helping trader Tom Hayes rig the Libor rate, mean that the SFO needs a high-profile victory to improve its reputation. Will 2019 see a revitalised SFO boosting its credibility by securing notable victories against those it accuses of financial wrongdoing?

Like I said, I don’t make predictions. But with these issues and the likes of cryptocurrency, tax evasion and possible reform of the Bribery Act all attracting increased official attention, 2019 is set to be far from dull when it comes to business and the law.

Aziz Rahman is founder of Rahman Ravelli; a top-ranked business crime law firm in national and international legal guides.