Aziz Rahman of Rahman Ravelli
Aziz Rahman of award-winning business crime solicitors Rahman Ravelli outlines the importance of taking precautions when seeking to trade outside of the UK.
For many, trading beyond the borders of the UK has obvious benefits. If the markets are there and there appears to be an appetite for what you are selling, it makes perfect sense to seize the opportunities.
But as with any venture, you have to be aware of the possible pitfalls. Trading abroad can bring obvious benefits in terms of gaining a share of more markets; resulting in increased demand for your goods and services and the prospect of greater profits. But it can also bring challenges that make it vitally important that those venturing abroad for business do so using caution and forward planning in order to stay compliant with all the laws in the countries where they are looking to trade.
Different countries have different laws. That may be an obvious statement to make – and it doesn’t take a lawyer to make it. But those in business need to take every possible precaution to ensure they comply with every law that is relevant to them in each and every country where they trade.
As an example, some countries take the view that bribery is a regular part of doing business. Yet although the bribery may not lead to a company being prosecuted in that country it could easily lead to it being prosecuted in the UK. The UK’s Bribery Act makes it possible to prosecute any UK company or individual for involvement in bribery anywhere in the world. So while use of a bribe as part of your business in any country where bribery is rarely prosecuted may raise few eyebrows in that country, it could mean up to ten years in prison or an unlimited fine here in the UK.
It is worth also emphasising that the penalties could be severe if you become involved, however unwittingly, in money laundering. Countries that may previously have had little interest in investigating money laundering are now looking to tackle it – and are co-operating with other countries to ensure they are more effective at doing so.
The most obvious outcome of this is that more companies could find themselves being investigated. But, less obviously, it could lead to the money launderers using ever more complex lengths to disguise their activities – and that can mean targeting vulnerable companies to be used as unknowing vehicles for their wrongdoing. This is just one reason why it is important to take proper precautions to avoid becoming involved in any form of business crime while trading abroad.
If any precautions are to be worthwhile, they need to be based on proper research: research on both the country where you intend to do business and on the companies or individuals with whom you intend to trade in that country. Without “doing your homework’’ you run the risk of falling foul of the law; including laws you may never have even known existed.
For example, a country where you are looking to do business may be subject to sanctions and export controls. Breaching these - whether it be through deals with government organisations, companies or individuals - could mean severe criminal penalties or large fines.
When it comes to moving assets or money, it is especially important to carry out background checks into a current or potential trading partner. Seeking proof of identity and determining precisely who is involved in a deal (and who will gain from it) are vital tasks that must be carried out. Failing to carry them out properly can make it much easier for someone to defraud you, use your company to launder money or arrange seemingly genuine deals with you as a disguise for other forms of criminal activity.
If you are trading abroad, it is more than likely that you are not as aware of the risks as you are when trading in the UK. That is why exercising caution is such a necessary part of doing business abroad. And don’t be concerned that carrying out such checks may annoy potential trading partners or any third parties involved. If they are genuine and looking to do legitimate business they will be prepared to comply with your request for information. They may even be looking to obtain information about you and your company for exactly the same reason.
The Importance of Procedures
Companies must make these checks. But they must also have properly maintained procedures in place so that anyone with suspicions knows how to report them. Without such procedures it can be difficult for a company to defend itself against allegations of wrongdoing.
Workplace procedures should also be in place that reflect the trading risks in each country where you aim to do business. Taking legal advice about the most appropriate procedures can be a worthwhile investment. Limiting the cash amounts involved in deals, making staff responsible for checking funding sources and restricting use of company accounts can all reduce the possibility of wrongdoing – which is essential when trading abroad.
Not taking the right approach to trading abroad can lead to companies and individuals facing difficult questions rather than obtaining the hoped-for benefits.
Aziz Rahman is founder of Rahman Ravelli; a top-ranked business crime law firm in national and international legal guides.
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