The lengthening arm of the law: Why HNW individuals are facing scrutiny

More intrusive investigatory procedures mean that international HNW individuals are under the microscope, says Phil Smith

The influx of investment into London from Russia and Eastern Europe, UAE, Asia, China, the Far East and Africa has inevitably attracted more intense scrutiny of sources and provenance of funds as the investigating authorities struggle to adapt to the differing cultural practices of new investors and entrepreneurs. It is against this background that a more aggressive and invasive anti-money laundering regime has emerged.

The use of unexplained wealth orders and account freezing and forfeiture orders are the most oft quoted examples of a more intrusive and aggressive approach by the state. However, 2017 saw the introduction of restrictions on the use of police bail prior to someone being charged with an offence.

This piece first appeared in the Spear’s 500 2021. Click here to access the new Spear’s 500 website

This led to the adoption of the widespread practice of inviting an individual to attend a police station ‘for questioning as a volunteer’ – often regarded as a more low-key, less formal process than ‘interview under arrest’ but one which is just as likely to attract a more immediate public stigma.

It is also arguable that this uniform practice more acutely increases the potential exposure of HNWs to a formal criminal investigation. Imposing on an individual the status ‘released under investigation’ is now a weapon of choice in the investigator’s armoury.

This piece first appeared in the Spear’s 500 2021. Click here to access the new Spear’s 500 website

This enhanced level of interest is reflected in an exponential rise in the demand for criminal law advice tailored specifically to the needs of HNW clients whose immediate, overriding concern is invariably the potentially disastrous damage to their reputation – as opposed to the prospect of a criminal investigation or even arrest.

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The early engagement of lawyers well-schooled in the dual disciplines of high-stakes, high-profile criminal investigations and reputation management is imperative. The past 12 months have witnessed the perils of the well-connected individual failing to appreciate the precariousness of their own position and misjudging the public mood to their own detriment.

Offering an integrated approach puts any firm at a significant advantage in providing a coordinated strategy that combines high-quality criminal law advice with the skills of PR professionals and experienced reputation management lawyers.

This piece first appeared in the Spear’s 500 2021. Click here to access the new Spear’s 500 website

As we head into the post-Brexit and post-Covid era, the UK’s appetite for attracting investment from far and wide, and the arrival of global wealth will present significant challenges for lawyers and other professional advisers to HNW people.

The already long reach of the UK authorities is extended further by more cross-jurisdictional cooperation and requests for mutual legal assistance within Europe, as well as the ever-assertive approach from the United States Department of Justice.

This, combined with a geopolitical landscape in which international trading sanctions feature prominently, means the case for HNWs to promptly and often pre-emptively secure effective and pragmatic legal advice is clearer than ever.

Phil Smith is partner and head of the crime and regulatory team at Simons Muirhead Burton

This piece first appeared in the Spear’s 500 2021. Click here to access the new Spear’s 500 website