UK High Court clarifies basis for NCA to investigate modern slavery allegations in supply chain

A legal theory submitted by a non-government organisation (NGO) in a judicial review before the High Court has outlined the possibility for the UK’s cross-border law enforcement agency to investigate companies for potential modern slavery claims in their supply chains on the grounds that such products may constitute the proceeds of crime. 

Although the legal challenge was rejected by the High Court, the analysis in the judgment is important for businesses with international supply chains to take note, according to two legal experts of Pinsent Masons.

“The case shows that money laundering legislation may be used to investigate claims of modern slavery in supply chain, and that the NCA is open to investigating cases under such legislation if there is clear, specific and sufficient evidence for a concrete allegation of modern slavery,” said Sean Elson of Pinsent Masons.

“Time will tell if the NCA does use money laundering legislation in this way, but if it does, the 2002 Proceeds of Crime Act (POCA) could provide an alternative tool or method for investigation and enforcement in connection with supply chains in a way that the Modern Slavery Act 2015 doesn’t,” added Neil Carslaw, also of Pinsent Masons.

The application for judicial review was filed in response to a decision by the Home Office, His Majesty’s Customs and Excise and the NCA not to investigate claims of forced labour under various pieces of legislation, including POCA.

The central contention in relation to POCA was that the NCA had failed to launch investigations under Part 7 of the 2002 Act, which sets out the provisions and offences relating to money laundering, based upon a misdirection of law as to the scope of the powers under that part of the Act. The applicant also alleged that the NCA misdirected itself in law about the powers of civil recovery of criminal property under Part 5 of the POCA.

The NCA responded by stating that there is a need for specific criminal property to be identified prior to an investigation being launched under the 2002 Act. It decided to not launch an investigation because “nothing has been identified which provides a concrete allegation of modern slavery upon which the NCA could commence an investigation”.

According to the judgment, the NCA agreed that modern slavery offences, such as forced labour, could amount to criminal conduct under POCA, but emphasised that those offences must be clearly and specifically set out and the resultant criminal property specifically identified. In its submission, the NCA argued that it is insufficient, for the purposes of POCA, to deal in hypothetical scenarios or presumptions. In the absence of identifying a specific consignment of goods that is the product of the relevant criminality, there was no POCA offence to investigate.

The High Court agreed with the NCA and refused to grant relief to the applicant. However, the most remarkable part of the judgment relates to the NCA’s openness to future investigations.

The NCA said that whilst the evidence in this case to date did not disclose sufficient grounds to suspect that any identifiable criminal offence had been committed by identifiable individuals, it remained “open to the possibility that the intelligence picture may change at any time”.