Aziz Rahman of Rahman Ravelli
Aziz Rahman, of award-winning business crime solicitors Rahman Ravelli, explains the steps that those in business can take to avoid problems when trading abroad.
It makes perfect sense in business to go where you think you can do a deal. And if you feel that there is the chance of drumming up trade in another country, then there is absolutely no reason not to cross borders in a bid to find new markets.
You must, however, be aware of the risks. Trading abroad can bring its own set of challenges. It can be seen as a chance to make profits in places that are happy to pay for the goods and services that you offer. Trading in a foreign country, however, does require extra research and caution in order to stay on the right side of the law.
Some countries, for example, have a culture where bribery is seen as an everyday part of working life. That may be the case in those places but in the UK it can lead to prosecution. The Bribery Act makes it possible to prosecute any UK company and / or its employees for involvement in bribery anywhere in the world. This means that if you do use a bribe to seal a deal in a country where bribery is regarded as the norm you could be facing up to ten years in prison and / or an unlimited fine.
When it comes to money laundering, the penalties of becoming involved – knowingly or otherwise – are also high. We are living in an era in which even countries such as Afghanistan and Yemen are introducing measures to clamp down on money laundering and there is more cooperation than ever before between countries looking to tackle it.
It pays, therefore, to take steps to make sure that you do not become embroiled in bribery, a scheme to launder money or any other form of business crime when trading abroad. It may well be that trading abroad doesn’t pose greater risks than doing business in the UK. But that may depend on your caution and the advice you take.
Your caution has to involve more than a basic wish not to get into trouble. You need to research the country and its risks.
You must check a current or potential client or trading partner’s background. This is vitally important, especially if your relationship with them involves the moving of money or assets. Issues such as proof of identity and establishing who exactly stands to gain from a deal have to be addressed properly.
Such checks, known as due diligence, cannot be carried out as an afterthought or a box ticking exercise. They have to be made on all parties to a deal; including any third parties, brokers, middlemen or other agents involved in the deal. When starting to trade abroad, many individuals and companies need to take advice and seek assistance from people already working “in the field’’. But it is important that such people are vetted as closely as anyone else.
This may sound excessive but a failure to do this can offer great opportunities for anyone looking to defraud you or use your company as a means to launder money or as a front for other criminal activity. If you are trading abroad you may not be as wise to the risks as you would be if you were doing business in the UK. Such checks are necessary – and if a potential trading partner is legitimate they will have no problem complying with your request for information.
Once those checks are made, however, those making them need to know what to do next. Companies need to have a clear set of procedures in place so that anyone with suspicions knows who to report them to.
It is worth emphasising here that such procedures must be properly maintained and enforced. Procedures for reporting and investigating suspected wrongdoing are not worth the paper they are written on if they are not acted upon. And ineffective procedures will make it hard to defend yourself against business crime allegations, wherever in the world they are made.
When it comes to the Bribery Act, it is possible for a company to use the defence that it had adequate procedures in place. By using this argument, you are saying that you did everything possible to prevent the bribery. But such an argument will only succeed if you can show to investigators that your procedures were robust, fit for purpose and being acted on properly. Anything less than this will not be considered adequate – and that defence argument will fail.
Such procedures must take into account the risks posed by trading in each country you aim to do business in. It may be necessary to take legal advice about the dangers of trading in particular countries and the appropriate procedures to introduce to minimise the risks. For example, limiting the cash amounts involved in deals, making certain trained staff responsible for checking third party funding sources and restricting use of company accounts to certain personnel can all reduce the scope for wrongdoing.
When trading in a new country, there is nothing wrong with approaching the opportunity with enthusiasm. But you cannot let this optimism blind you to signs of wrongdoing.
If someone suggesting a business transaction is vague about the money or people involved, why it is happening or why you’ve been approached, you must consider whether it all seems logical. If it doesn’t seem logical and you go ahead with it, you will face very difficult questioning if investigators then suspect the deal has facilitated, for example, money laundering or corruption.
Aziz Rahman is founder of Rahman Ravelli; a top-ranked business crime law firm in national and international legal guides.
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