DPAs are arrangements under which an entity voluntarily discloses its own criminal activity to the criminal authorities, and as recognition for this it can avoid criminal prosecution - as long as it gives full disclosure of the offending, pays any financial penalty or compensation ordered, covers all the costs associated with administering the DPA and demonstrates over time that it has remedied the failings that led to the offending conduct. If the entity does all that, then it will be safe from prosecution. DPAs may not be available to entities that are already under investigation. They are designed for genuine voluntary disclosures of previously unknown evidence of criminal conduct. Ultimately, it's a decision for the Royal Court to decide to approve the DPA application or to reject it.
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In December 2022 the States of Jersey approved the implementation of a Deferred Prosecution Agreement (DPA). The Criminal Justice (Deferred Prosecution Agreements) (Jersey) Law 2023 came into force on Friday 3rd March 2023, accompanied by detailed Guidance issued by the Attorney General's (AG) office Attorney General's guidelines and directives/Deferred Prosecution Agreements.
But what does this mean for Me?
A DPA is described as being an exceptional criminal justice tool and not a routine measure. A DPA and the DPA proceedings in Jersey are likely to differ from those undertaken in other jurisdictions. Thorough consideration and Jersey legal counsel should be sought before submitting a self-report to enter in to a DPA arrangement.
The main driver for this law is to provide another route for a financial institution/firm to explore when engaging with the regulator or external authorities as a result of an offence, criminal conduct, or regulatory issue. In the AG's guidance it refers to a DPA as being a discretionary tool which enables a firm to make a full and carefully structured reparation for its criminal conduct and to potentially avoid the damaging consequences of a conviction. In a relatively smaller jurisdiction, the harm caused to the reputation of an entity/corporate as a result of a conviction is likely to be significant and entering in to a DPA with the AG may avoid a complex, lengthy and costly trial.
As the decision to enter into a DPA with the AG is voluntary, the entity is expected to deal with the AG is an open, cooperative and transparent manner, this is especially important to ensure the successful negotiation of the terms of the DPA. The effect of the DPA is that prosecution against the firm is suspended for a defined period provided the firm meets certain specified conditions, which are agreed beforehand with the AG and are as set out in the DPA.
Each DPA is bespoke to the entity concerned. A DPA is defined within the new law as being a legal agreement entered into by the entity between them and the Attorney General. An important part of the DPA process is that the proceedings are conducted under the supervision of the Bailiff and the Royal Court who decide that entering into a DPA is in the best interest of justice and that the terms set out in the DPA are considered to be fair, reasonable and proportionate. A DPA is usually established for a set period of time, with a clear expiry date, and will generally result in an Independent Monitor being put in place to oversee and/or test the remediation actions being undertaken by the entity, again this is agreed and set out within the terms of the DPA.
Voluntarily entering into a DPA through the Royal Court will lead to a fine and costs being imposed against the financial institution, which could be significant. The DPA could be viewed as an alternative to criminal prosecution, as once the terms of the DPA have been agreed the AG will not seek to prosecute the firm. However, in more serious cases the Attorney General, could if he decides, also pursue a criminal prosecution against the firm and has a right to do so under the newly created Criminal Justice (DPA) Jersey Law. The AG could also prosecute the entity if the DPA is terminated without all the conditions of the DPA being fully met or if any statement of fact is admissible against the entity. As such we would strongly recommend seeking Legal advice/support ahead of any decision being taken by a Financial Institution to go down the DPA route.
All engagement between the firm and the AG remains private and confidential. DPAs are not publicly assessable documents, unless and until they are published by the AG on the Law Officers' Department website in accordance with an Order of the Royal Court. The same applies to the interactions held with the Independent Monitor.
The purpose of the DPA is to drive a change in longer term behaviour, and this is likely to result in some form of remediation programme for the firm to agree and implement. Each remediation programme will differ, it is likely to be bespoke to the firm concerned and the nature of the issues/offence identified, and will be overseen by an Independent Monitor appointed by the AG. Any form of remediation needed is likely to take time and resource and will undoubtedly result in significantly increased operating costs. Its not only about fixing the gaps or problems but it's also about embedding change, which could also be cultural change, where old practices or habits take considerable time to adjust to the new ways of working.
DPA's are usually put in place for a set period of time with an agreed expiration date. Once completed and the Independent Monitor and the AG have concluded that the terms of the DPA have been met in full, it will cease to have effect and the Attorney General will stop any further proceedings in relation to the offence. However, the firm may still find that they continue to be the subject of heightened supervision by the Commission, and this may last for a lot longer period depending on the nature of the issues identified.
The following flowchart is a high-level overview of the DPA process flow showing how it's intended to work:
Further details are set out in the Attorney General's guidelines and directives/Deferred Prosecution Agreements.
When was the last time you tested your firms AML/CFT/CPF Culture?
At the end of last year, the JFSC provided feedback following on from their examination of the AML/CFT Business Risk Assessments and Strategy documents in 2022. In this paper they identify a number of areas of best practice, which includes the consideration of using an anonymised staff questionnaire to gauge the prevalence of AML cultural barriers within your organisation.
This is where we can help. Baker Regulatory Services in conjunction with Dynamic-GRC has created a BRS AML/CFT/CPF Culture Assessment Tool. This automated tool uses questionnaires designed to assess the effectiveness of your organisations AML/CTF/CPF culture and controls. The anonymised results from the completed employee questionnaires are then shared with your Board Members in a detailed report format. This report is designed to help you identify AML/CFT/CPF gaps or issues early by highlighting best practice used within the industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.