Are you ready? Dawn raids and dealing with inspectors at the door

Dawn raids by regulators have always existed. However, there is now potential for them to become more common. More regulators have dawn raid powers and there are more legal bases for their use. We have seen increased interest recently from clients in dawn raids; asking for copies of our Dawn Raid Manual and bespoke training. So what can you do to prepare in advance for any dawn raid?

• Understand who can carry out a raid at your premises: all banks are aware of potential raids by the SFO and the FCA. What is less well known is that since 1 April 2015 the FCA may also carry out anti-trust related dawn raids (which had previously only been carried out by the European Commission and the CMA). Ofgem, with its new criminal powers in relation to market abuse in the physical gas and electricity markets, will inevitably soon also carry out dawn raids under these powers. There are many other regulators with powers to carry out raids, including HMRC.
• Consider a team in advance: a core team can be decided in advance and should include specialist external lawyers. However, it is important that everyone within an organisation knows what to do when a dawn raid takes place. Significant penalties can be imposed for non-compliance.
• Prepare a Dawn Raid Manual: we have a standard document to assist with this.

• Consider a mock raid: these help clients understand about what inspectors actually do. Taking the FCA as an example, when the FCA starts a raid, one of the first things that the investigators will do when they enter the premises is make a sketch of the rooms that they are going to search. They will identify desks, filing cabinets and - crucially - their approach searching IT systems. A mock raid can give you the chance to test your own IT strategy in response. With SFO and FCA raids, the main thing is to try to get the data captured in a forensically sound way. You should also try to stop critical infrastructure being taken away even though technically, if they have a warrant and seize and sift powers, they can remove it. Mock raids also provide an opportunity to practise ‘shadowing’ and push back on privileged items.

Interested in dawn raids?

Do get in touch if you would like a copy of our Dawn Raid Manual or would like to request training.