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US criminal prosecutors have arrived in London to interview individuals away from domestic territory as government investment in the rate fixing case extends overseas
The United States criminal justice system is well renowned for ensuring that potential wrongdoings are put right, even if the alleged perpetrators are overseas.
Yesterday, forming the most recent development in what has become an overtly high-profile global scenario, it was reported by CNBC that US criminal prosecutors flew to London to question market participants on an individual basis with regard to the alleged manipulation and fixing of FX rates.
Indeed, the United States Department of Justice announced late last year that it was opening a criminal inquiry in conjunction with the Federal Bureau of Investigation (FBI) into the possibility of FX market manipulation within its jurisdiction, however by extending the long arm of the law abroad, the investment by government authorities in unearthing the truth behind the accusations leveled at some of the world’s largest financial institutions is reaching such high levels that suggest they are intent on a result in their favor.
The FCA has powers to compel people to answer questions with no right to silence, while the US constitution includes a protection against self-incrimination. Evidence gathered by the FCA under compelled conditions then becomes problematic and difficult for US authorities to use.
Material gleaned from FCA-compelled interviews cannot be used directly by UK criminal authorities either, unless individuals lied to the regulator during questioning.
Lawyers advising traders suspended in the wake of the authorities’ probes said that the FCA’s suggestion of an interview being simultaneously considered compelled by UK standards and voluntary by US ones had no legal standing, with one labelling it “weird and wrong”.
The difference in how interviews are conducted matters because the stakes are higher in the US, which has opened a criminal investigation into alleged rigging of key forex benchmarks, while in the UK the probe remains a regulatory one. Prison sentences for white-collar crime tend to be higher in the US than the UK.
Both government agencies and traders’ lawyers have learnt lessons and tactics from the ongoing investigation into the alleged rigging of LIBOR, the key interbank benchmark rate, where US and UK authorities have criminally charged 13 former traders and brokers so far.