A dawn raid can be carried out on any business regardless of size, and every business should be mindful of the possibility of one taking place. The potential for a dawn raid is an everyday reality for many businesses given the increasing criminalisation of business practices, growing numbers of regulatory criminal offences and the proliferation of money laundering laws and regulations. Head of Financial Crime David Savage explains.

Even the global Covid-19 pandemic and the associated public health lockdowns and social distancing guidelines have not curtailed the enthusiasm of authorities to obtain and execute search warrants. Stewarts’ Financial Crime Investigations and Tax Investigations teams have recently acted in respect of a dawn raid by HMRC officers on a business’s trading address and five home addresses of its directors, including several classified as elderly, vulnerable and self-isolating.

It is, therefore, imperative to plan for a possible dawn raid and ensure staff are adequately prepared and ready to respond to what is likely to be a hectic and stressful situation.

 

Dawn raid response team

A response team should be set up as part of your preparation for a potential dawn raid. This team should consist of:

  • Reception/security staff
  • Senior management, internal legal/compliance and/or external legal advisors (the “Response Team”)
  • Staff assigned to shadow the investigators throughout the day
  • IT director

 

Reception/security team

The first point of contact will likely be the reception or security team. They should be provided with clear instructions of the steps they are required to take, including, for example:

  • Taking copies of the warrant and IDs of the investigators
  • Contacting senior management immediately, informing them of the arrival of the investigators, providing them with the information and any documentation provided to them and requesting attendance on the premises
  • Accompanying the investigators to an empty room while the senior management or in-house/external lawyers arrive, and ensuring there are no files or computers in the room
  • Confirming with the investigators that representatives from the organisation will be with them shortly and that the organisation wishes to cooperate

 

Response Team

A member of senior management should attend immediately to establish the proposed method of conducting the search and obtain any further information in respect of what is being sought.

Immediate steps should be taken to contact the organisation’s lawyers, notifying them that a raid is taking place, the authority conducting the raid and requesting their attendance. A lawyer should be present throughout the raid. If this is not possible, every effort should be made to keep the lawyer appraised of the situation and updated by phone. It may help to identify any external lawyers your organisation will want to use in advance of a raid and have their numbers to hand.

It is worth noting that any dawn raid might be part of a coordinated search in respect of several premises. It is, therefore, important to establish whether there are any other premises subject to a search so that appropriate arrangements can be made.

Our experience is that parallel raids often take place at the home addresses of directors/senior management to secure information stored on phones and laptops. Arrangements may need to be made for their legal representation at police stations. It may also be necessary for a team to be deployed, or re-deployed, to observe and monitor these searches.

 

Shadowing the investigators

Investigating officers should not be permitted to roam freely around the sites without supervision. Preferably, each investigator should be shadowed by at least one member of the response team, who will be responsible for ensuring:

  • The investigator only reviews material within the scope of the warrant
  • A thorough and contemporaneous note is taken of:
    • The material looked at
    • Any items seized
    • The areas searched
    • Any questions asked and answers given
  • Copies are made of any documents and the contents of any electronic devices seized

 

IT director

Investigators will want to understand your organisation’s IT system, as they will likely request access to hard drives or servers to conduct electronic searches. It is increasingly likely that they will wish to take forensic images for later review. This can often be beneficial to organisations, as keeping the hard drives or serves on the premises may allow for a smoother continuation of the business once the raid has concluded.

 

At the start of the raid

The investigators will typically arrive unannounced at the premises first thing in the morning. The warrant should be examined to consider whether the investigators are authorised to enter the building and establish the scope of the search.

All members of staff should be put on notice of the investigators’ arrival. Staff should remain courteous and cooperative throughout. However, they must not delete any documents unless authorised to do so, discuss the raid with anyone or comment on the raid using an internal method of communication.

 

Legal professional privilege

Investigators are not allowed to demand the production of documents protected by legal professional privilege. In the UK, this comprises:

  • Communications between a lawyer and client for the purpose of giving or obtaining legal advice
  • Documents created for the dominant purpose of actual or pending legal proceedings

It is critical that documents falling into either of the above categories are identified as soon as possible. The investigators will expect to be provided with justification for why these documents/devices are privileged, and steps must be taken to provide sufficient information. Where there is doubt as to whether something is privileged, it must be clearly identified, marked and separated from other items seized so that it can be reviewed at a later date by an independent lawyer.

 

At the end of the raid

Depending on the scope of the warrant, a dawn raid can be a lengthy process. If the investigators have not completed their search at the end of the day, you will need to establish when they will be returning and whether anything is required to be sealed in the meantime.

A meeting to debrief staff should take place as soon as convenient, and consideration should be given as to whether any internal investigations need to take place.

You should also consider whether insurers need to be informed of any allegations against the organisation or individuals.

 

Conclusion

Even in times of global economic uncertainty, it is essential for authorities to investigate financial crime. Indeed, the pandemic has provided a perfect storm for organisations to take advantage of the government’s “pay now, ask questions later” approach to Covid-related support.

More than £61bn has been claimed through the UK government’s Coronavirus Job Retention Scheme (aka the “furlough scheme”), supporting 1.3 million employers and 11.5 million furloughed jobs. In response to numerous concerns regarding Covid-related fraud, the government has established the HMRC Taxpayer Protection Taskforce to claw back fraudulently claimed grants and loans. Organisations that find themselves in HMRC’s sights would be well advised to prepare for the possibility of a dawn raid.

 

 


 

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