The UK’s Criminal Finances Act, a new law that expands remedies for UK prosecutors to use against gross human rights abuses, also targets activity “connected to” gross human rights abuses.
Activity “connected to” gross human rights abuses includes: directing or sponsoring, profiting from, materially assisting, or acting as an agent in connection with, the commission of gross human rights abuses.
There are no intent requirements attached to connected activities, meaning that the Criminal Finances Act appears to be creating a strict liability enforcement regime. This would be in line with the new tax evasion charges contained within the Criminal Finances Act, as well as the UK Bribery Act.
However, unlike the Criminal Finances Act’s provisions for Tax Evasion, there is no “reasonable preventative measures” defense available for gross human rights abuses. Avoiding sanction will thus require heightened diligence and meaningful human rights impact assessments.
Out of all the unlawful acts in the Criminal Finances Act, profiting from gross human rights abuses will probably be the most dangerous one for companies. While “profiting from” is undefined, Parliamentary debate shows that the purpose of the gross human rights abuses provisions were to ensure that the UK was a hostile place to those attempting to move, hide, or use the proceeds of corruption or human rights abuses.
This points to “profiting from” targeting the flows of goods and funds tainted by their origin in human rights abuses, as well as anybody who chooses to handle them. The flow of funds is fairly intuitive, a classic example being a bank storing funds for a dictator. However, it is the provisions for goods that may end up being more important for UK importers. Goods can be laundered, just like funds.
Consider ore mined from a patch of land that was seized by a company off the back of torture and abuse. That ore is the tainted product of a crime, and any company purchasing it is profiting from the abuse. Liability may potentially travel up the supply chain as well, but it remains to be seen if and how prosecutors deal with these remote cases.
Material assistance will also be a thorny issue for companies doing business abroad. When the Criminal Finances Act is read together with UK criminal statutes, it is likely that material assistance would be the provision of goods or services or financial or technical support that may make the commission of gross human rights abuses easier.
Due to the apparent strict liability regime of the Criminal Finances Act, the company will likely not have to have intended to aid the gross human rights abuses. The core danger of “material assistance” is that it may be violated through basic transactions as part of normal business dealings.
For instance, if a local sugar producer pays policemen to violently seize farms and beat protestors, western businesses purchasing sugar from that company may be seen as providing the financial support it needs to keep paying bribes, and thus materially assisting the gross human rights abuses. Depending on how broadly UK prosecutors and courts interpret the Criminal Finances Act, such normal acts of international commerce may get caught in the web of liability.
In the next post, we’ll talk about compliance programs and a due diligence model aimed at uncovering risk from gross human rights abuses.
Richard J. Rogers is a founding partner at Global Diligence LLP, a London-based law firm specializing in international law and human rights compliance. It offers a wide range of services to companies operating in high-risk zones to help ensure compliance with international standards. He can be contacted here.
Sasho Todorov is a third year Vanderbilt law student and an intern at Global Diligence. He can be contacted here.