2/25/2021 U.K.

’s Financial Crimes Agency Wants Companies to Invest in Compliance - WSJ

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RISK & COMPLIANCE JOURNAL

U.K.’s Financial Crimes Agency Wants Companies to

Invest in Compliance
Two cases with diverging outcomes illustrate the value of a strong compliance program, the director of
the Serious Fraud Office says

Lisa Osofsky, director of the Serious Fraud Of ice, in a 2018 interview. On Tuesday, she said the SFO
now evaluates compliance programs by asking, ‘Are they part of the company’s DNA?’
PHOTO: CHRIS J. RATCLIFFE BLOOMBERG NEWS

By Dylan Tokar
Feb. 23, 2021 5 27 pm ET

The U.K.’s major economic crimes investigative agency has taken steps to emphasize the
need for companies to invest in programs and procedures designed to prevent
wrongdoing, its director said on Tuesday.

The focus on the strength of companies’ compliance programs is a new one for the Serious
Fraud Office. “The emphasis we place on it today is significantly stronger than it was
when the agency was born” in the late 1980s, SFO Director Lisa Osofsky said at a Society
of Corporate Compliance & Ethics conference.

Under Ms. Osofsky, who began her tenure in 2018, the SFO has offered additional guidance
on how it handles corporate cases, including how it evaluates compliance programs.

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“Are they part of the company’s DNA?” Ms. Osofsky asked compliance practitioners
during an online speech. “Or do they just adorn a very nice couple of binders that are held
on a bookshelf that don’t really do much more than provide window-dressing?”

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The agency can credit companies with strong compliance programs by negotiating more
lenient settlements with them. Ms. Osofsky pointed to two cases with divergent outcomes
that she said showed the SFO’s commitment to doing so.

The SFO in July 2019 struck a £19.2 million ($24 million) deal with a subsidiary of public
contractor Serco Group PLC. A year later, it reached a similar settlement with security-
services company G4S PLC, which agreed to pay £38.5 million ($48.6 million).

Both cases involved allegations of fraud in connection with contracts to provide

electronic-monitoring services to the U.K.’s Ministry of Justice. The offenses occurred
between 2010 and 2013, according to the agreements.

Serco reported the misconduct and began cooperating with the SFO early, and was
rewarded with a faster and less expensive resolution, Ms. Osofsky said. G4S took
substantially longer to cooperate and received a smaller discount, she said.

The state of each companies’ compliance programs played a role in the outcomes, Ms.
Osofsky said. “G4S was in a different place in its compliance journey,” she said. “It hadn’t
yet embedded and thought through its compliance obligations in a way that Serco could
demonstrate to us it had.”

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Spokespersons for G4S and Serco declined to comment on Ms. Osofsky’s remarks.

In a first for the SFO, the G4S settlement also contained a provision requiring the
appointment of a reviewer to ensure the company adhered to its agreement with the
agency. “It is the first time we use such a construct to oversight the compliance
development and compliance markers,” Ms. Osofsky said.

Under U.K. law, the arrangement is distinct from the so-called independent monitors used
in the U.S. to ensure compliance with settlement agreements, she added.

Ms. Osofsky, a former U.S. federal prosecutor who worked in compliance for Goldman
Sachs Group Inc., has direct experience with monitorships in the U.S.

She previously worked for the consulting firm Exiger LLC, which was appointed as a
monitor for HSBC Holdings PLC after the bank in 2012 agreed to pay $1.9 billion to settle
anti-money-laundering and sanctions violations.

Building on the principles released last year, the SFO will continue to deepen its
understanding of compliance and engagement with compliance professionals, Ms.
Osofsky said.

“We’re upskilling ourselves to be better and smarter in this evaluation, including bringing
in people with experience and expertise in this area,” she said.

Write to Dylan Tokar at dylan.tokar@wsj.com

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