What should you do – and what should you NOT do – if the police turn up at your office asking questions about one of your clients?
It is not often a situation facing an accountant in practice, but for that reason most accountants would be troubled by a visit from a police officer making enquiries about a client and would not know how they ought to deal with this. So I thought it would be useful to set out a few key points.
Duty of confidentiality
An accountant has a contractual and ethical duty of confidentiality in favour of the client – even if the client is a rogue! So the accountant should not voluntarily disclose any information about the client to the police, and you do not have a duty to answer police questions.
So, unless the police can show you some basis on which you are legally required to provide information, then you should not provide any. You are not required to answer questions from a police officer just because they are a police officer, nor are you required to provide documents just because a police officer has asked you for them.
I am sometimes asked, ‘Isn’t that obstructing a police officer in the execution of his duty?’ (which is an offence). But passively not answering questions or not providing documents does not amount to obstruction.
Responding to a Court Order
However it may be that the police officer has with them a Court Order, issued for example under s345 Proceeds of Crime Act 2002 or (in England and Wales) under Schedule 1 Police and Criminal Evidence Act 1984. Such an Order will require the production of documents, normally within seven days.
In this case the accountant must comply with the Order – but this will not require the immediate handover of the documents.
The Order will require the production of documents (including electronic documents) – it will not require the accountant to provide any explanation of the documents, or any commentary on the documents or the client’s affairs, and it will not require the accountant to make any sort of witness statement.
You should avoid disclosing more than the Order requires.
Should you make a witness statement?
The police officer may invite you to make a witness statement and may offer to draft it for you. It is generally best not to make any witness statement.
The draft witness statement may say little more than, ‘On [date] I handed to Police Officer Bloggs the following documents ….’. But it is not necessary to make any witness statement, and making a witness statement may draw you into criminal court proceedings in which you would rather not be involved.
It is a simple matter for Police Officer Bloggs to make his own witness statement, ‘On [date] I received from accountant John Brown the following documents ….’. So by declining to make any form of witness statement you do not create any difficulty for the police.
In particular do not be tempted to try to explain your actions, or inactions, in acting for the client. You risk talking yourself into trouble if you make a witness statement.
Do you have to produce everything you have?
The Court Order will specify which documents, or which types of documents, you are required to produce. But it may be very widely drawn. It might, for example, require you to produce, ‘All documents, notes, working papers, correspondence, emails and records relating to Peter Jones and P Jones Ltd’. That could be a large volume of material, particularly if you have acted for the client for 20 years!
There is no harm in discussing with the police officer whether a more limited range of documents might by sufficient, at least initially. Both your time and theirs might be saved by focusing on a more limited range of documents.
Do not overlook the need to include AML records (including copies of ID documents and AML risk assessments) and Suspicious Activity Reports if they fall within the wording of the Court Order.
Should I polish the documents before handing them over?
You might be tempted to review your working papers and meeting notes and improve them by initialling all the blank boxes and adding further explanatory text to them. Do not do this! The police are not interested in checking the standard of your working papers. More importantly, polishing the documents in this way might be regarded as an attempt to pervert the course of justice (a criminal offence) by falsifying evidence.
So just hand over the documents as they are – warts and all!
What should I say to the client?
Nothing at all. Do not contact the client when the police arrive. Do not ask the client for permission to speak to the police or to supply the police with documents.
The client may, or may not, know about the police investigation. If he tells you that he is subject to an investigation, that’s fine. If he does not know about the investigation it is not for you to tell him.
You do not need the consent of the client to comply with a Court Order.
What else should I do?
It would be sensible to review and update your AML risk assessment for the client now that you know they are the subject of a police investigation.
You may decide, in the light of this new development, to make a Suspicious Activity Report to the National Crime Agency (even if that report will provide no additional information to law enforcement).
You may decide to disengage the client. If you do that, avoid referring to the police investigation unless you know that the client is already aware of it.
Disclosure in the public interest
It is sometimes argued that an accountant should answer police questions and make a witness statement because that is in ‘the public interest’. However there are competing public interests to be considered here. There is a ‘public interest’ in an individual being able to be open and frank in consultations with a professional adviser (accountant, lawyer, doctor, etc) without fear of information he provides being disclosed to the authorities. In my view the balance of these public interests will, in almost every case, favour non-disclosure to the authorities.
Also, it should not be forgotten that in respect of money laundering (and hence most acquisitive crime) and terrorist property offences the accountant will consider submitting a Suspicious Activity Report to the National Crime Agency – and this may be viewed as protecting the public interest in those cases.
It is possible to imagine a circumstance in which the public interest would over-ride the duty of confidentiality and the public interest in non-disclosure. For example, suppose a client’s wife has been stabbed. In examining a box of records from the client the accountant comes across a bloody knife. In these circumstances the public interest in notifying the police about the knife would over-ride the duty of confidentiality and the public interest in non-disclosure – but such circumstances will be very rare.
It would normally be wise to seek legal advice before relying upon the public interest to over-ride client confidentiality.
It’s not the police – it’s the SFO
If your client is the subject of an investigation by the Serious Fraud Office, obtain legal advice promptly. The SFO have additional powers, which the police do not have, and dealing with the SFO is a different matter from dealing with the police.
