HSE University Anti-Corruption Portal
SFO Issues DPA Guidance
Natalia Gorbacheva

The U.K. Serious Fraud Office (SFO) has published a chapter from its Operational Handbook* focused on the SFO’s approach to the Deferred Prosecution Agreement.


The Deferred Prosecution Agreement (DPA) is a mechanism for resolving criminal cases, which the U.K. applies to a certain kind of crimes only: money laundering, fraud, bribery and others (the exhaustive list of these crimes is provided in the Crime and Courts Act, Schedule 17, Part 2). The agreement is concluded between law enforcement bodies (the SFO or the Crown Prosecution Service) and the accused company and implies a series of conditions to be fulfilled by the latter (for instance, cooperate with investigation, pay financial penalties and improve its compliance programme) within the term of the agreement as an alternative to adjudication. If there is any subsequent breach of the terms of the DPA, the criminal proceedings can be re-instituted. If the Court considers that a breach has occurred, the Company can then be prosecuted for the same conduct.

The released chapter of the SFO’s Operational Handbook is about different issues that prosecutors have to address when they take a decision on concluding a DPA.

In order to enter into a DPA there are two tests that must be applied by the prosecutor: the evidential test and the public interest test.

Evidential test

The first test implies that in order to enter into a DPA there must be evidence that a company has committed an offence that will make it possible to prosecute the perpetrators. To this end, the prosecutor should first consider whether the Full Code Test in the Code for Crown Prosecutors (hereinafter, the Code for Prosecutors) is met: there must be sufficient evidence to provide a realistic prospect of conviction against each suspect on each charge. When deciding whether there is “sufficient” evidence to prosecute, prosecutors should ask themselves the following:

  • Can the evidence be used in court? Is there the likelihood of that evidence being held as inadmissible by the court? What is the importance of that evidence in relation to the evidence as a whole?
  • Is the evidence reliable?
  • Is the evidence credible?
  • Is there any other material that might affect the efficiency of evidence?

If the conditions of the Full Code Test are not met, prosecutors can use the Threshold Test which means that there is at least a reasonable suspicion based upon some admissible evidence that the company has committed an offence, and that there are reasonable grounds for believing that a continued investigation would provide further admissible evidence within a reasonable period of time, so that all the evidence together would be capable of establishing a realistic prospect of conviction in accordance with the Full Code Test (for further details on the Threshold Test please refer to the Code for Prosecutors).

In cases where neither limb of the evidential test can be met, the conclusion of the DPA is not feasible, and prosecutors should consider whether the case is appropriate for a Civil Recovery Order.

Public interest test

The public interest test means that prosecutors must be satisfied that the public interest is properly met by entering into a DPA with the company instead of proceeding to prosecution. This requires a balancing exercise of the factors that tend to support prosecution and those that do not.

The Code for Prosecutors defines the following main criteria of evaluation:

1) How serious is the offence committed? The more serious is the offence the more likely it is that a prosecution is required.

2) What is the level of culpability of the suspect? Culpability is determined by:

  • the suspect’s level of involvement,
  • the extent to which the offending was premeditated and/or planned,
  • the extent to which the suspect has benefitted from criminal conduct, and other factors,

3) What are the circumstances of and the harm caused to the victim? For instance, a prosecution is more likely if the offence has been committed against a victim who was at the time a person serving the public.

4) What was the suspect’s age and maturity?

5) What is the impact on the community?

6) Is prosecution a proportionate response (also from the point of view of its cost)?

7) Do sources of information require protection? Proceeding with a prosecution may require making public the details that could harm sources of information, ongoing investigations, international relations or national security.

Further factors to be taken into consideration by prosecutors are set out in the Deferred Prosecution Agreements – Code of Practice (hereinafter, the DPA Code).

Factors in favour of prosecution include, in particular:

  • A history of similar conduct (including prior criminal, civil and regulatory enforcement actions against the company and/or its directors/partners and/or majority shareholders);
  • The conduct alleged is part of the established business practices of the Company;
  • The offence was committed at a time when the Company had no or an ineffective corporate compliance programme and it has not been able to demonstrate a significant improvement in such programme since then;
  • Failure to notify the wrongdoing within reasonable time of the offending conduct coming to light, and others.

Additional public interest factors against prosecution include, in the first place:

  • Cooperation with investigation,
  • The existence of a proactive corporate compliance programme both at the time of offending and at the time of reporting but which failed to be effective in this instance;
  • The offending represents isolated actions by individuals [in breach of corporate policies], for example by a rogue director;
  • A lack of history of similar conduct involving prior enforcement actions against the company and/or its directors/partners and/or majority shareholders, and others.


The document stresses that cooperation with investigation is a key factor to consider when deciding whether to enter into a DPA. The indicators of sufficient cooperation include:

  • Within a reasonable time of wrongdoing coming to light reporting the Company’s offending (self-reporting);
  • Taking remedial actions including, where appropriate, compensating victims;
  • Preserving available evidence and providing it promptly;
  • Identifying relevant witnesses and disclosing their accounts and the documents shown to them, etc.

Parallel investigations

Where a DPA is under consideration and where there is a parallel investigation against the company prosecutors should take into consideration different aspects, such as early de-confliction in respect of investigative activity, including interviews, or analysis of laws regarding disclosure of material in respective jurisdictions (both between agencies and to defendants) and their potential impact.

DPA negotiations

The conclusion of a DPA is preceded by relevant negotiations. Whether to invite a company to enter into DPA negotiations is a decision for the Director of the SFO. At the same time, an invitation to enter negotiations is no guarantee that a DPA will be offered.

When inviting a company to enter DPA negotiations, consideration should be given to the most appropriate addressee of the letter of invitation: a subsidiary or a larger corporate. Ordinarily the addressee should be the company that committed the wrongdoing. However, in some instances, for example, where the parent company has been the contact with law enforcement officers, a different decision may be taken. Furthermore, it is possible to agree a joint DPA with more than one corporate entity, which may be preferable to separate agreements with each linked company.

The invitation to negotiations is formalised by a letter requesting confirmation from the company that it wishes to enter into negotiations.

Before DPA negotiations can begin it is necessary for terms of negotiations to be agreed in writing. Such terms set out the undertakings agreed between both parties in respect of confidentiality, the use of material and liability of the company for the provision of inaccurate, misleading or incomplete information.

Use of a DPA and related documents

Despite the confidentiality restrictions of the DPA itself/its draft and other related materials, in some cases they can be used other than for the purposes of DPA negotiations, for example:

  • Where a DPA has been approved by the Court**, then the statement of facts contained in the DPA is to be treated as an admission by the company in any future criminal proceedings against the company;
  • Where a DPA is not approved by the Court, certain specified material may be used in evidence against the company (for instance, any draft of the DPA or draft statement of facts).

Moreover, the DPA Code references the possibility to use material that may have been provided by the company prior to entering into DPA negotiations, such as internal or independent report, notes of interview or witness statements.

Statement of facts

A DPA includes, among other things, a statement of facts that must give particulars relating to each alleged offence and include details, where possible, of any financial gain or loss.

The company must admit the contents and meaning of key documents referred to in the statement of facts, however there is no requirement for formal admissions of guilt, which coincides, in particular, with the U.S. practice.

The statement of facts should be drafted accurately, concisely and in a way that it is accessible to all those who will ultimately read the document. When detailing the gains and losses made it can be helpful to distil complex transactions down to key transactions. In respect of a bribery case, it may be sufficient to simply list the dates and amounts of the corrupt payments.

Where charges against individuals have been brought or are contemplated, it is possible that any publication of the DPA may pose a risk of prejudice to the administration of justice in such linked proceedings. In this case, the court may order that publication of the DPA be postponed or information tending to identify individuals be excluded if necessary to avoid that risk.

Terms of a DPA

In spite of the fact that a company, as highlighted above, is not obliged to admit its guilt when concluding a DPA, the DPA terms may include the admission of guilt where appropriate.

The DPA should make clear in its terms the factors the prosecutor has taken into account, including the reasons why the prosecutor is deferring prosecution.

When specifying the DPA expiry date it is recommended that prosecutors give consideration to the time sufficient to ensure that the company is capable of complying with all obligations in the DPA: ensure cooperation with ongoing investigations, in particular, those of linked individuals; fulfill the financial obligations, including payment of compensation, disgorgement, and financial penalty; implement/improve the company’s compliance programme; and, if applicable, ensure external review of the implementation/improvement of the latter.

Provision should be made in the DPA for what will happen if there are any changes in corporate structure (merger or acquisition). The company should also consult with the SFO before making any public statements regarding the DPA.

Financial terms

A DPA will normally include the following financial terms:

  • Financial penalty: the amount of any financial penalty must be broadly comparable to the fine that a court would have imposed on conviction for the alleged offending following a guilty plea. In practice, this means that in the case of a DPA the financial penalty is calculated with reference to sentencing principles that are set out in the Sentencing Council Guideline “Fraud, bribery and money laundering: corporate offenders” subject to a multiplier linked to culpability and harm;
  • Compensation to victims, which is considered to have priority over payment of any financial penalty;
  • Disgorgement of illicit profits/assets (is equivalent to confiscation in cases of criminal conviction);
  • Payment of prosecution costs;
  • Donations to charities which support the victims of the offending.

Approval of a DPA

For a DPA to come into force, as noted above, it should be approved by the Court. The Court decides whether the DPA is in the interests of justice and that its terms are fair, reasonable and proportionate to the offences committed.

To this end, after the terms of the DPA have been settled, the prosecutor makes a preliminary application to the Court which must be heard in private. Once the Court has approved the proposal to enter into an agreement at the preliminary hearing the prosecutor makes a final application. After the final approval by the Court, the DPA itself along with the preliminary and final declarations must be published.

Breach of a DPA

If during the DPA the company is believed to have failed to comply with a term of the DPA, the prosecutor should write to the company identifying the alleged failure and asking that it be rectified immediately. The prosecutor also notifies the court of any such developments. If it is not possible to rectify the company’s failure in this manner, the prosecutor may apply to court seeking a finding that the company is in breach of the DPA and an appropriate remedy also through a formal variation to the DPA.

In the case of a significant breach, or the case of a less significant breach for which the court does not approve the proposed remedy, the Court may order that the DPA be terminated. In these circumstances criminal proceedings against the company can be re-instituted.

Expiry of a DPA

On the expiry of the DPA, the prosecutor should give notice to the Court that it does not want proceedings to continue. Once proceedings are discontinued, fresh proceedings against the company for the same offence may not be instituted unless such conditions as provision of inaccurate, misleading or incomplete information by the company are satisfied.

*The Handbook does not produce any legal effects for companies and is for internal guidance only for prosecutors.

**An important feature of the DPA in the U.K. (unlike, for instance, in the U.S.) is that its conclusion must be approved by the Court.

Criminal prosecution

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