The UK’s Serious Fraud Office Under Nick Ephgrave – One to Watch at Home and Away

On 13 February 2024, Nick Ephgrave gave his inaugural public speech as the new Director of the UK’s Serious Fraud Office (SFO). With a background in law enforcement, including as assistant commissioner of the Metropolitan Police Service, Ephgrave is the first law enforcer, as opposed to lawyer, to hold the Directorship. Many hope that this departure from tradition will bring a fresh perspective to the agency and restore public confidence in its proficiency.

Although Ephgrave’s speech had a distinctly domestic focus, certain of the initiatives he outlined appear inspired by those already available in the arsenal of his U.S. counterparts. Following his speech, Ephgrave also travelled to the United States to meet with counterparts from U.S. enforcement agencies, reportedly to “cement relations”.

In this article we discuss those initiatives as outlined by Ephgrave, and born out of his “visceral reaction to criminality”, which suggest a move towards closer alignment with the United States, and the potential impact of those initiatives on U.S. companies.

Incentivising Whistleblowers: A nod to the United States

Perhaps reflective of his law enforcement background, a key focus of Ephgrave’s speech was prospective mechanisms to gain early access to “smoking gun” evidence. Whilst the SFO’s vigorous use of dawn raids since the start of Ephgrave’s tenure has been widely reported, a newer (and heavily debated) topic arising from his speech related to incentivising individuals through:

• Financial rewards for whistleblowers/witnesses and
• Better use of the reduced sentences and immunity provisions for cooperating offenders under the Serious Organised Crime and Police Act 2005.

Ephgrave’s arguments on both counts focus on the success of similar schemes in the United States. He cites that 86% of the $2.2 billion in civil settlements and judgments recovered by the U.S. Department of Justice have been based on whistleblower information, and observes that 700 UK whistleblowers have engaged with U.S. law enforcement agencies since 2012.

This approach is not entirely alien in the UK. For example, (i) the UK’s Competition Markets Authority offers financial rewards for informants who provide information regarding cartel activity (the maximum amount of which was more than doubled in 2023) and (ii) His Majesty’s Revenue and Customs does the same for tax fraud intelligence.

Ephgrave has also triggered other UK agencies to consider the idea of incentivising whistleblowers, including the Financial Conduct Authority (FCA), which had previously rejected the notion. Therese Chambers (FCA Joint Executive Director of Enforcement and Market Oversight) and Steve Smart (FCA Co-Head of Enforcement) have said that they will be liaising with the SFO before coming to a decision. Any movement by UK agencies in this regard may also be informed by the outcome of the UK government’s review of the whistleblowing framework which was announced last year, the findings from which are expected to be published towards the end of March 2024.

Collaboration is Key

A second key focus of Ephgrave’s speech was on making the SFO the “collaboration partner of choice”. Although referring only to domestic agencies (e.g., the National Crime Agency and the Metropolitan Police Service) when giving examples of SFO cooperation, Ephgrave has proffered aspirations for the SFO to strengthen its working relationship with foreign agencies: “Almost every major economic crime today crosses jurisdictions, so strong international relationships are a crucial part of our approach.”[1]

Ephgrave’s recent visit to the United States, where it is understood he met with his counterparts at the Department of Justice’s Criminal Division, the Eastern District of New York, and the Southern District of New York, further demonstrates his commitment to bringing the SFO to the forefront of investigations with a UK nexus both at home and abroad, a balance that previous SFO Directors have struggled to strike.

Ephgrave’s focus on speed, pragmatism, and collaboration, in combination with the introduction of new legislation to further enable the investigation and prosecution of corporate crime with a UK nexus (namely the Economic Crime and Corporate Transparency Act 2023, see our previous article for further details) should also bring the agency back into sharp focus for companies domiciled in the United States. This is particularly so in relation to the new ‘failure to prevent fraud’ offence introduced by the Act, which is intended to apply to any company whose employees (i) commit fraud under UK law or (ii) target victims based in the UK, regardless of whether the company or its employees are domiciled in the UK.

Concluding Remarks

Actions speak louder than words, but Nick Ephgrave has certainly started his tenure as Director of the SFO with vigour, and with plenty of building blocks to make the next five years a success, both in terms of successful prosecutions and international cooperation. The white-collar crime community waits with bated breath to see what 2024 will bring.

[1] Nicholas Ephgrave Linkedin post: (29) Post | LinkedIn.