What is the Modern Landscape of White-Collar Crime?

Tax evasion, money laundering and other varieties of white-collar crime are among some of the hardest offences to uncover. This month we hear from Central Associates Limited Chair Helen Hatton on her firm’s work in the world of global intelligence, investigations and surveillance, while also looking more broadly at the world of white-collar crime and how her own career has taken shape.

How did you get into white-collar practice, and what does that practice look like today?

The story began in the late 1980s. I worked for American Express Bank in a wealth advisory role and was shocked to hear so many investors’ stories of dreadful mis-selling and the downright fraud they had suffered prior to seeking assistance from AMEX. I could see how the very strict internal control framework which we had to work to in AMEX protected the clients and quickly gathered that very few British investment houses had similar protections in place at that time.

This led me to become interested in financial services regulation. In 1991 I took up an opportunity to establish the world’s first offshore enforcement function with the Isle of Man Financial Supervision Commission. It was a fabulous job. The island had become a refuge for UK advisors who had not achieved licensing under the UK Financial Services Act of 1986. They would form a Manx company using nominee shareholders and directors and under that cloak of anonymity carry on their (often fraudulent) investment business in the UK.

In those days the Isle of Man courts required a local cause of action to trigger civil discovery proceedings and police needed either a Manx victim or perpetrator. As a result of these legal restrictions, nothing had been done to help these investor victims. However, after the introduction of the Manx Investment Business law, the activity of these UK operators comprised unauthorised investment business (as the Manx company they were using did not have authorisation under the regulatory regime of the Isle of Man) and my division could take action.

It was my job to receive the investor complaints, investigate using statutory powers, get the company files from the company administrators offices, establish the beneficial ownership, track the assets, wind up the company in the public interest and through the position of Provisional Liquidator, deemed Official Receiver, recover the assets for the investors. I took over 50 cases to court during that period and used Companies Act disqualification powers to ban 12 directors.

We also assisted the UK regulator of the day, the Savings and Investments Board, to achieve the first offshore freestanding Mareva injunction in a case called SIB v Lloyd-Wright. These developments in effect ended offshore secrecy, the principles being quickly followed in cases across the Crown Dependencies, Caribbean and other British legal model offshore territories.

I took over 50 cases to court during that period and used Companies Act disqualification powers to ban 12 directors.

It is a time I remember as innovatory, where personal effort made a real difference and when I really learned about the terrible personal damage that happens to victims of fraud. Families split, marriages fail, homes are lost. Investigating and catching the baddies became a passion – and remains so to this day!

I took that passion to a new job in Jersey in 1999 when I was appointed Deputy Director General of the Financial Services Commission (JFSC). It was a big job. I was responsible for developing a team capable of bringing in an all-crimes anti-money laundering framework and devising a regime to regulate the trust company industry; investment advisors, managers and dealers and later looking at money services business including “non-fiat” currencies and various other areas. Across the same timeframe, we had to deal with the progress of the global unfair tax competition initiative and ensure all our regulatory framework was such that our financial services business held the information they would be required to produce.

During my ten years, we built a fabulous organisation, lifted the reputation of Jersey to that of a leading wealth management jurisdiction – and, of course, I learned a great deal about the way trust and company structures work, and can be abused, which has stood me in great stead in countless investigations. I left the Commission in 2009 and started Sator Regulatory Consulting Limited, which did what it said on the tin, and in turn merged that with BDO in 2016, exiting in late 2020.

It has been a great journey. One cannot ask more of a career than to have fun, help people and make some money! Now I have the delightful opportunity to “hand craft” a collection of appointments to match my favourite working areas – fundamentally financial services and investigations. Accordingly, I am particularly delighted to have taken up two key appointments, one as independent non-executive director of Santander International and the other as Chairman of Central Associates Limited.

One cannot ask more of a career than to have fun, help people and make some money!

Santander is an outstanding bank with a caring and professional culture and I thoroughly enjoy my interactions with them. I particularly enjoy the balance they achieve between being leading innovators on the one hand, yet maintaining a very prudent approach on the other.

Central is in an entirely different market sector, taking me right back to my love of investigations. The company is based in London, operates globally and undertakes investigation, intelligence and surveillance mandates for corporates and private clients.

Over the 13 years Central has been in business, we have taken on a broad range of work. The mandates vary widely but all focus on protecting or finding people, assets or information. Mandates can relate to private and highly personal matters, or be relatively public involving litigation support, establishing publicly disclosable evidence. Throughout our many assignments, the tasks have varied considerably, and subjects in these cases have ranged from rogue businesspeople and common fraudsters to high-profile political figures and kleptocrats.

It is through the creativity and skill of our worldwide investigative team that we are able to use multiple and varied avenues of intelligence to complete each instruction. Covert surveillance, human Intelligence (HUMINT) and desk-based investigations, for example, allow us to trace persons of interest, establish patterns of life, identify residential addresses, places of business and associated individuals.

In international tasks of this nature, our principal objective is to gain a complete and comprehensive understanding of the subject’s offshore structures and from this to flush out the various activities, relationships and assets to retrieve the misappropriated funds. We have also been able to reclaim regime assets looted from overseas governments and identify the wealth the subjects have derived from corrupt practices.

Our principal objective is to gain a complete and comprehensive understanding of the subject’s offshore structures

Across these assignments, significant assets and holdings of real estate (residential and commercial), have been identified and traced back to the subjects of our enquiries, who often use complex structures through nominee holdings and trusts across a range of offshore jurisdictions to obscure their nefarious practices. To date, we have conducted work on the ground in 38 jurisdictions, located across most of the earth’s continents.

In your opinion, what skills are most valuable to a legal professional wanting to be successful within white-collar practice?

I think half are personal attributes and half are knowledge-based. The personal attributes run on from my previous comments – the old saying “people buy people first” is very true. You cannot be sustainably successful in the long term if no one trusts you, no one likes you and you have a reputation for dumping others and only looking after yourself.

Of the knowledge-based skills, case mastery and organised working habits get you most of the way home, but I think there is another aspect worth mentioning, and that relates to commercial standards. Although the structures and transaction trails through which white-collar crime is effected are often very complex (and they need to be mastered), it is important to identify the points of dishonesty and/or points of conduct which run contrary to normal business practice and prevalent commercial standards. That is where the mischief will lie. To do this, one has to understand what normal, honest behaviour looks like for those types of transactions. From there it is much easier to demonstrate why the course which was taken was improper.

What advice do you have for other women wanting to follow the same path?

Male or female, I think one just has to go all in. The harder you work the luckier you get. I am a big believer in mastering the detail, being totally on top of the paperwork, gripping the evidence. Advocacy is fine, but demonstrable fact, clearly explained, wins cases.

That advice is aimed for the casework side of our working life, but it also applies to our role as line manager, team leader, director or indeed leader of a business. Avoid becoming one of those “bosses” who does not bother to read the minutes and has not learned the brief or reviewed the draft. I say ‘always sweat the detail.’ It may not be sexy, but it totally empowers you in any dialogue, whether with colleagues on an internal matter, in client interactions or across the courtroom or negotiating floor.

I think one just has to go all in. The harder you work the luckier you get.

On the advice list, I would also counsel people to be good colleagues. Help one another, be generous with your knowledge, be kind. It is not necessary to be personal friends with colleagues, but you do need effective working relations if you are to deliver the mission successfully.

You have spoken out before about the Panama and Pandora Papers, which exposed secret financial systems that allowed the world’s wealthy to hide their money from taxing authorities and governments. What are the major challenges of locating assets that have been hidden offshore?

The ICIJ is definitely an amazing organisation and much of their investigative work has certainly been in the public interest, although one can have an interesting debate on the sources and provenance of the data their work is based upon.

Those points aside, there is no doubt that people quite often dodge their tax. The poor do it alone, the rich with so-called professional advisors. Those who dodge tax or aid and abet tax evasion all commit criminal offences. They should be prosecuted.

I think investigations are often not progressed because there is misplaced mystique about “offshore”. There is a lot of misunderstood terminology, so people – even professionals – are not actually speaking the same language. People instruct us to look for trust bank accounts, for example, when a trust clearly cannot have a bank account; people instruct us to identify the beneficial owner of a trust when a trust clearly does not have a beneficial owner; people confuse a power of attorney with a nominee agreement, or shares held as nominee versus shares held under a declaration of trust.

Requests which ask the wrong questions will inevitably not produce the answers required. Step one, therefore, is to work with an investigatory firm with solid offshore experience. Contact us!

 

Helen Hatton, Chairman

Central Associates Limited

Tel: +44 020-7459-4650

E: info@centralassociates.com

 

Helen Hatton is the head of Central Associates Limited and, in addition to her roles mentioned in this article, is a Fellow of the Institute of Advanced Legal Studies, a Fellow of the Royal Society of Arts, a member of the Editorial Board of the Journal of International Banking Regulation and a Liveryman of the Worshipful Company of International Bankers. She has also been appointed to the Strategic Advisory Board of the International Fraud Group and is a recognised international speaker on regulatory and compliance topics.

Central Associates is a London-based intelligence and investigations firm. The company provides a broad range of bespoke services including people and asset tracing, litigation support and surveillance and counter surveillance.

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