The Long Arm of Law Enforcement in Multi-jurisdictional Investigations
Corporate investigations in Asia-Pacific frequently involve misconduct which spans multiple jurisdictions and, as a result, often attracts the attention of various law enforcement and regulatory authorities. It is critical to be aware of the powers that authorities wield and how this may impact on or disrupt the company’s investigations and business operations more generally.
This article considers the key aspects of the legal assistance and cooperation available to authorities in the Asia-Pacific region. The questions addressed are as follow.
- How can government authorities obtain evidence in other jurisdictions?
- To what extent do government authorities cooperate and share information with their counterparts in other jurisdictions?
- How can law enforcement pursue criminal prosecution against an individual located in another jurisdiction?
We conclude by highlighting the practical considerations, drawn from our experience in handling these issues in the context of multi-jurisdictional investigations.
Obtaining evidence in other jurisdictions
Mutual legal assistance treaties
One of the key mechanisms available to authorities to obtain evidence from other jurisdictions is by seeking the cooperation of a counterpart authority in that jurisdiction through a mutual legal assistance treaty (MLAT).
Countries may enter into multilateral or bilateral arrangements to facilitate mutual assistance. For instance, the Association of Southeast Asian Nations multilateral treaty on Mutual Legal Assistance in Criminal Matters has Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam as signatories. By contrast, Hong Kong and China have opted to enter into bilateral treaties with individual countries.
Each jurisdiction will generally implement MLAT obligations through domestic legislation. These laws then provide a domestic basis for fulfilling the obligation to provide assistance in criminal matters, including obtaining statements, documents and performing searches and seizures of information. A request made and approved through the formal MLAT mechanism will then be enforceable in the relevant jurisdiction.
In practice, the process for obtaining assistance can often prove quite difficult. MLATs typically require a process to be followed, which can take time and requires the satisfaction of various criteria. In particular, MLATs will generally contain a number of circumstances in which a request must be refused or postponed.
As a result, many enforcement agencies might seek first to rely on informal channels, seeking assistance through their overseas counterparts rather than formally making the request through an MLAT. If this is the case, the request may not be enforceable and any assistance provided by the relevant individual or company will be voluntary in nature. Accordingly, where a company is receiving a request with a cross-border element, it is important to understand the nature of any requests being made to identify whether the company is being compelled to assist, under what basis and the consequences of acceding to the request.
In circumstances where the request is voluntary in nature, consideration should be given to the applicability of other laws, such as data privacy or the availability of legal professional privilege. In the case of data privacy, many statutes will provide protection for information that has been released as a result of compulsion. Such protection is unlikely to be available where the information has been voluntarily produced. Similarly, where legal professional privilege attaches to the document, voluntary production of that document will amount to a waiver of privilege. Although a limited waiver of privilege could be used, consideration will need to be given to whether that will be effective in the circumstances.
Extraterritorial evidence collection and the cloud
With the increasing use of cloud storage by businesses, it is becoming more common for data relevant to a criminal investigation to be stored in a different jurisdiction. This has often resulted in a need to rely on MLATs to obtain that data, which can slow down the investigative process. The US and the UK have both recently taken steps to address this situation, which may have a ripple effect, spreading internationally to prompt law reform and change practice in other jurisdictions.
Looking to the United States, in 2018 the Clarifying Lawful Overseas Use of Data (CLOUD) Act was passed. The act provides that a particular type of production order for data targeted at technology providers may, prima facie, apply to data located in jurisdictions outside the US, albeit subject to a formal process for challenge under certain specified grounds. The CLOUD Act provides a framework for foreign governments to enter into bilateral agreements with the US with the effect of permitting that jurisdiction’s law enforcement authorities to make requests directly to US service providers, rather than via the US government under a mutual legal assistance treaty. Reciprocal arrangements must be made that then allow the US to request electronic data from service providers in that country.
Similarly, the United Kingdom recently passed the Crime (Overseas Production Orders) Act 2019. This act facilitates the application by UK-based law enforcement agencies for production orders in the UK which are capable of being served upon communications service providers based outside the UK, in order to assist with UK investigations and prosecutions of serious crimes. Similar to the CLOUD Act, the Crime (Overseas Production Orders) Act provides for international cooperation arrangements to be entered into, enabling those orders to be served and recognised outside the UK and reciprocal recognition of similar orders from the foreign jurisdiction in the UK.
For those subject to such orders, the benefit is that they avoid the situation of a company being subject to conflicting legal obligations – most commonly, the obligation to disclose data by the law of the requesting jurisdiction while at the same time being obligated not to disclose data by the privacy or data protection laws of the data host jurisdiction.
China’s blocking statute
The People’s Republic of China has recently enacted the International Criminal Judicial Assistance Law (ICJA Law) which could potentially prevent those based or working in China from providing assistance in criminal proceedings outside the jurisdiction.
Under the ICJA Law, individuals and companies are required to obtain approval from the Chinese government before disclosing evidence located in China to overseas criminal enforcement authorities. Chinese authorities are also prohibited from seeking assistance from their overseas counterparts without obtaining a similar approval.
The practical effect of this law is that multinational companies may not be able to comply with overseas production orders or requests from authorities located outside China, without first seeking the consent of the Chinese government. Given the law has only been recently enacted, it is not yet clear how freely the Chinese government will provide such consent. However, should consent not be forthcoming, a multinational company may have to choose between violating the ICJA Law or being held in contempt of a production order.
Cooperation between authorities
Aside from MLATs and other production orders, regulators and enforcement authorities have developed their own tools to enhance their investigative powers. These tools typically stem from 'soft law' instruments such as memoranda of understanding (MOUs) between two or more parties, although facilitated by domestic legislation or regulation in each jurisdiction.
Financial services regulators
One sector which has shown great appetite for setting up cooperation channels between regulators is the financial services sector. Regulators rely on a variety of mechanisms for cooperation, including bilateral MOUs and bilateral agreements, as well as multiparty MOUs.
Financial regulators in the Asia-Pacific have entered into numerous MOUs and cooperation agreements with their counterparts in the region, as well as their equivalents in the EU, the UK and the US. By way of example, the Hong Kong Monetary Authority (HKMA) has entered into MOUs and other formal arrangements with multiple banking supervisory authorities outside the Hong Kong Special Administrative Region. Broadly, these cover the sharing and exchange of information to assist in the supervision of banks that operate in both signatories’ jurisdictions as well as regular or informal meetings to discuss common issues.
In the investigations context, bilateral cooperation agreements can be used to allow regulators to share information and keep it confidential between the parties to that agreement. For example, the HKMA and the People’s Bank of China entered into an MOU to strengthen supervisory cooperation under Bond Connect, a mutual market access scheme to promote the development of the bond market in China and overseas jurisdictions. That MOU establishes mechanisms for the collection and request of information for investigations into illegal activities under Bond Connect. The MOU also governs the use of non-public information obtained, in that it specifies that use must be in accordance with the purposes stated in the request, and that parties should facilitate and support another party’s use of information as far as possible.
There are various multilateral cooperation instruments. For example, the International Organization of Securities Commissions (IOSCO) established a Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMOU), which currently has 124 signatories. Members of IOSCO are typically the primary securities or futures regulator in a particular jurisdiction. The MMOU provides for cross-border enforcement cooperative arrangements including investigatory assistance and information exchange with overseas regulators. Information exchange under the MMOU has increased a hundredfold since its inception in 2002.
In March 2017, the Enhanced MMOU (EMMOU) was approved by IOSCO. This fosters greater cross-border enforcement cooperation. It was introduced to meet the challenges of combating financial misconduct in global financial markets, especially in light of technological advances. A handful of regulators have signed it to date, including the Hong Kong Securities and Futures Commission (SFC), the Monetary Authority of Singapore, the Republic of Korea Financial Services Commission, the US Commodity Futures Trading Commission, the Australian Securities and Investments Commission, and the UK Financial Conduct Authority.
The EMMOU states that authorities will provide each other with the fullest assistance permissible to investigate suspected violations, ensure compliance and enforce their respective laws and regulations. This includes powers to obtain and share audit working papers, existing internet service provider records and telephone records, freeze assets and compel physical attendance for testimony and interviews. This constitutes a potentially powerful tool on the part of signatories.
Like financial regulators, anti-corruption agencies actively liaise to fight graft. In fact, around 13 per cent of foreign bribery cases are brought to the attention of law enforcement authorities through the use of formal and informal mutual legal assistance between countries for related criminal investigations. Although cooperation and collaboration outside formal mutual legal assistance channels does exist and is, in fact, on the rise, it is widely acknowledged that there is a need for increased coordination.
The United Nations Convention against Corruption (UNCAC), which has 186 state signatories, provides a basis for anti-corruption agencies to cooperate. Under the UNCAC, state parties have agreed to cooperate with one another in every aspect of the fight against corruption, including prevention, investigation and the prosecution of offenders. In particular, state parties are to afford the widest measure of mutual legal assistance in investigations, prosecutions and judicial proceedings in relation to the offences under UNCAC, including undertaking measures to support the tracing, freezing, seizure and confiscation of the proceeds of corruption. Other provisions provide for the extradition of offenders, transfer of sentenced persons and law enforcement cooperation and joint investigations.
The UK Serious Fraud Office (SFO) has recently emphasised the need to cooperate more effectively across jurisdictions and with cross-border enforcement agencies. Similarly, in 2018 the US Deputy Attorney General announced a new US Department of Justice (DOJ) policy to enhance coordination with other law enforcement agencies. Termed the policy against ‘piling on’, the aim ‘is to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties’ by requiring DOJ attorneys to coordinate with one another. Early indications suggest an increased willingness to coordinate and cooperate with foreign enforcement agencies.
Multinational companies will often need to be sensitive to the potential risks to employees who find themselves caught up in an investigation. Where an individual may provide assistance to the authority as a witness, the mechanisms set out in the relevant MLAT or MOU will provide some guidance as to the process of obtaining assistance in the jurisdiction in which the individual is located. However, in circumstances where the employee finds him or herself a target of the investigation, the foreign authority may lay charges and ultimately seek to extradite that individual so that he or she can face trial.
Extradition refers to a legal process by which a person who is accused or convicted of a criminal offence (Person Sought) is legally surrendered by one jurisdiction (Requested Jurisdiction) to be transferred to another jurisdiction (Requesting Jurisdiction) to be tried, sentenced or to serve a term of imprisonment. Extradition may take place pursuant to treaties (bilateral or multilateral) or ad hoc arrangements, in both cases usually supported by domestic legislation in the Requested Jurisdiction and the Requesting Jurisdiction.
Most countries have entered into bilateral treaties with other countries providing for extradition arrangements between the two jurisdictions. Examples of multilateral treaties include the European Convention on Extradition and the Inter-American Convention on Extradition. Subject matter specific treaties may also provide for extradition obligations, such as the United Nations Convention against Transnational Organized Crime or the UNCAC. Unless a country enters into a treaty imposing such an obligation, there is no duty in international law to surrender an individual.
Countries will normally make an assessment of other countries prior to entry into an extradition treaty in order to be satisfied that surrendered fugitives will be subject to minimum standards of treatment in relation to due process and punishment.
The content of extradition treaties and domestic laws implementing those treaty obligations clearly varies depending on the jurisdictions involved. However, the UN Model Law on Extradition (Model Law) and the UN Model Treaty on Extradition (Model Treaty) provide a framework that is intended to reflect international practice. The overarching elements the Model Treaty addresses are as follows.
- Matters relating to extradition of the Person Sought from the Requested Jurisdiction (otherwise referred to as passive extradition):
- the substantive conditions for extradition;
- the grounds for refusal of an extradition request; and
- the process for extradition proceedings and documentary requirements.
- Matters relating to extradition of the Person Sought to the Requesting Jurisdiction (otherwise referred to as active extradition):
- the process for making a request, including the competent executive and judicial bodies; and
- the treatment of the Person Sought in the Requested Jurisdiction and limits on action that can be taken and on re-extradition.
- Matters relating to transit of the Person Sought through a third jurisdiction on their way from the Requested Jurisdiction to the Requesting Jurisdiction.
Some general points to note about the conditions for extradition under the Model Law and Model Treaty are as follows.
- Extradition is only available in respect of offences that are punishable under the laws of both jurisdictions by imprisonment for a minimum specified period – known as the ‘double criminality’ requirement.
- The scope of extraditable offences can be further limited to specific crimes. Alternatively, a specified list of crimes may be excluded from the bilateral arrangements.
- However, where extradition of a person is sought for an offence against a law relating to taxation, customs duties, exchange control or other revenue matters, extradition may not be refused on the ground that the law of the Requested Jurisdiction does not impose precisely the same kind of tax or duty or does not contain a tax, customs duty or exchange regulation of the same kind as the Requesting Jurisdiction.
- There are mandatory grounds for refusal of extradition. This includes where the offence is regarded by the Requested Jurisdiction as an offence of a political nature, or where the Requested Jurisdiction has substantial grounds for believing that the request has been made for the purpose of prosecuting or punishing the Person Sought on account of his or her race, religion, nationality, ethnic, origin, political opinions or gender.
- There are also mandatory grounds for refusal where the Person Sought has been or would be subjected in the Requesting Jurisdiction to torture or cruel, inhuman or degrading treatment or punishment, or where judgment has been rendered in absentia, the Person Sought has not had sufficient notice of the trial or the opportunity to arrange for his or her defence.
- In addition, there are various optional grounds for refusal, including where the offence in relation to which the request has been made carries the death penalty under the law of the Requesting Jurisdiction or where extradition would be incompatible with humanitarian considerations in view of age, health or other personal circumstances of that person.
There are also optional grounds for refusal in respect of extraterritorial offences (where the alleged offence has been committed outside the territory of either jurisdiction) where the Requested Jurisdiction’s law does not provide for such an offence committed outside its territory in comparable circumstances.
Interpol red notices
The International Criminal Police Organization (INTERPOL) is an intergovernmental organisation whose membership comprises the overwhelming majority of countries’ law enforcement agencies.
The Red Notice system is a process by which the law enforcement agency in a member country can issue a request to locate and provisionally arrest an individual pending extradition. A Red Notice is issued by the INTERPOL General Secretariat at the request of that member country based on a valid national arrest warrant.
The system is not supported by any legal framework and INTERPOL cannot compel any member country to arrest an individual who is the subject of a Red Notice. Publication of a Red Notice simply provides notice to member countries that the person is wanted.
Member country practice in respect of Red Notices will vary. Some member countries will treat a Red Notice as an arrest warrant whereas others will require a domestic warrant to be issued prior to any detention. A member country may detain the subject or may instead begin deportation proceedings against the subject. If the subject is stopped at an airport, the country may also simply require the subject to return to the country of departure.
The process for issue of a notice is relatively straightforward.
A relevant law enforcement agency in a member country requests a Red Notice via their National Crime Bureau. Each member country hosts an INTERPOL National Central Bureau, which connects its national law enforcement with other countries and with the INTERPOL General Secretariat.
Compliance checks will then be conducted and, assuming the request meets the necessary criteria (see below), the INTERPOL General Secretariat issues a Red Notice. Law enforcement agencies in all member countries are then alerted through INTERPOL’s global network.
A number of conditions must be met before INTERPOL can publish a Red Notice:
- the offence concerned cannot be an offence that is of political, military, religious or racial character;
- the offence concerned cannot be an offence that relates to behavioural or cultural norms, family or private matters, administrative matters or private disputes;
- for a person sought for prosecution, the offence must be one that is punishable by at least two years of maximum deprivation of liberty;
- for a person sought to serve a sentence, the sentence remaining to be served must be for at least six months of imprisonment;
- the person sought must be sufficiently identified by name, photograph, etc;
- the requesting agency must provide sufficient judicial data including the relevant facts, charges, laws, penalties and a valid arrest warrant or judicial decision; and
- the requesting agency must provide assurances that extradition will be sought upon arrest, and that relevant authorities for extradition have been consulted.
Actions taken by law enforcement authorities and regulators in conducting their own inquiries can severely disrupt the company’s internal investigations and business operations more generally. The extent and nature will inevitably vary by reference to the nature of the case, the governmental agencies involved and, frequently, the political environment in that jurisdiction.
Nonetheless, there are some generally applicable practical considerations to consider.
- When addressing a request from an out-of-jurisdiction authority or regulator, make sure to carefully consider the nature of the request and whether or not the company (or individual) is being compelled to produce the information. In some circumstances, voluntary production of information to a regulator or authority can cause the company to lose protections around data privacy and legal professional privilege that might otherwise be available. Equally, insisting on relying on your strict legal rights, even for good reason, may frustrate some agencies who will see this as evasive.
- Voluntary sharing of information among group entities to placate law enforcement authorities can create an expectation of such conduct in the future. This may mean that a later refusal attracts even more suspicion than it would have had that precedent not been set.
- Before responding to a request (either voluntary or compelled), ensure that the company is aware of any potential restrictions or blocking statutes that might apply. There may be a tension between the laws of the jurisdiction from which the request or order originates and the jurisdiction where the information is held. Although such tension may not be able to be resolved, the company should make sure it is aware of the potential risk.
- When considering any strategy for addressing self-reporting, whether on a voluntary or an obligated basis, consider the prospect of information being shared among the relevant government agencies and how that impacts which agencies a report is made to, when that occurs and what is said.
- In circumstances where an individual is potentially subject to criminal charges in another jurisdiction, consider the company’s position and how the risk could be mitigated if the employee is retained. Even in circumstances where the allegations are considered unfounded or there is a disagreement with the alleged crime from a policy perspective, consider how this impacts the employees’ ability to travel and, in regulated industries, their fitness and propriety. Keep in mind also that INTERPOL Red Notices can be misused, although the process for challenging such notices is protracted when compared with the rapid speed with which they can be issued.
Managing multinational investigations is always challenging and can be particularly so with jurisdictions in the Asia-Pacific region. It is important for companies and their lawyers to be mindful of the web of government agencies that may take an interest in the conduct under investigation.
 See https://www.iosco.org/about/pdf/Text-of-the-EMMoU.pdf for the text of the memorandum and https://www.sfc.hk/web/EN/about-the-sfc/collaboration/overseas/iosco-mmou.html for a list of signatories.
 OECD Foreign Bribery Report, 2014.
 Transparency International, Exporting Corruption – Progress Report 2018: Assessing Enforcement of the OECD Anti-Bribery Convention (2018) at 16.
 See OECD Working Group on Bribery, 2016 Data on Enforcement of the Anti-Bribery Convention – Special focus on international cooperation (November 2017); Transparency International, Exporting Corruption – Progress Report 2018: Assessing Enforcement of the OECD Anti-Bribery Convention (2018) at 17.
 UN General Assembly, United Nations Convention Against Corruption, 31 October 2003, A/58/422, available at: https://www.unodc.org/documents/brussels/UN_Convention_Against_Corruption.pdf.
 Article 44 UNCAC.
 Article 45 UNCAC.
 Articles 48 and 49 UNCAC.
 Speeches by Lisa Osofsky (Director of SFO), 2019 and Matthew Wagstaff (Joint Head of Bribery & Corruption), 2018.
 Organization of American States (OAS), Inter-American Convention on Extradition, 25 February 1981, available at: https://www.oas.org/juridico/english/treaties/b-47.html.
 UN General Assembly, United Nations Convention against Transnational Organized Crime : resolution / adopted by the General Assembly, 8 January 2001, A/RES/55/25, available at: https://www.unodc.org/unodc/en/organized-crime/intro/UNTOC.html.
 UN Office on Drugs and Crime, Model Law on Extradition (2004) available at: https://www.unodc.org/pdf/model_law_extradition.pdf.
 UN General Assembly, Model Treaty on Extradition, resolution / adopted by the General Assembly, 14 December 1990, A/RES/45/116, available at: https://www.unodc.org/pdf/model_treaty_extradition.pdf.
 See generally https://www.interpol.int/en/How-we-work/Notices/Red-Notices.