Sunday 16 October 2016 7:47 pm

Criminal finance bill set to give police powers to delay M&A if there is suspicious behaviour

POLICE could be given the power to delay M&A transactions for up to six months under little-noticed proposals in the criminal finance bill.

The bill, which was published on Thursday, contains proposals to extend the time police have to investigate tip-offs from financial services firms for so-called “suspicious activities” from the current maximum of one month to half a year.

Finance professionals working on the transactions have a responsibility to report to the National Crime Agency (NCA) any activity they come across that has a "more than fanciful” chance of being tainted by money laundering.

Once the report is filed, a deal must be put on hold until consent to proceed with future work is received from the NCA. Although most reports are signed-off and consent to proceed given within a week, police can request an extension of a further month to conduct further investigations.

Under the new bill, police will have the power to extend a further 186 days to complete their investigations. Meaning that deals put on hold for this length of time would likely be doomed.

“The new rules could hugely damaging – in many cases, a delay of six months will likely kill a deal entirely. The victims in this will be business and individuals,” said Barry Vitou, head of global corporate crime at law firm Pinsent Masons.

Chris Stott, a senior associate in Clifford Chance's regulatory investigations, fraud and crime group said that it was a “significant” move by the government to change the period of time between making reports and receiving consent from the NCA, especially when one side of a deal could not tell the other the reason for such a delay.

“The need to effectively freeze transactions for such a lengthy period could have substantial practical consequences for parties to transactions, particularly when it is borne in mind that firms and individuals are barred from disclosing the reason for the delay during that period,” he said.

Meanwhile, Vitou had a stark warning to policymakers if the bill were to be passed by parliament.

“Businesses already struggling with Brexit uncertainty would be faced with six months waits to do a deal while police work out what to do under the proposals. They may decide to go elsewhere in Europe to do those deals,” he said.