Asia-Pacific trends
There has been a general shift toward stronger search and seizure powers by regulatory authorities in the region. In April 2020, Australia amended its financial services laws to allow its Securities and Investment Commission to seize a broader category of materials than was previously permitted under its search warrant powers.1 A March 2020 Hong Kong High Court ruling cleared the way for the city’s Securities and Futures Commission to seize electronic devices from suspects and obtain passwords for these devices when carrying out an investigation.2 Singapore has also strengthened the enforcement powers of its specialist regulators, such as the Personal Data Protection Commission, the Monetary Authority of Singapore, and the Competition and Consumer Commission of Singapore. The officers from these government agencies are empowered to enter premises without a warrant and obtain materials that are relevant to their investigations.
There is also growing cooperation and coordination among regulators and enforcement agencies. For example, the Indonesian Competition Commission shares information and undertakes joint enforcement operations with the Indonesian police, which has more extensive powers to conduct investigatory searches and seizures. Investigations initiated by enforcement agencies or regulators outside the region have also resulted in high-profile raids on the offices of implicated multinationals in the region, including China, Singapore, and Malaysia.
Dawn raids can be triggered by a wide range of alleged regulatory misconduct that goes beyond what may be traditionally deemed as “serious offenses” such as corruption or fraud, money-laundering, and the theft of state secrets or espionage, to include other areas such as antitrust and data privacy.
Some key considerations – what businesses can do
Prevention
The risk of a dawn raid can be minimized if businesses are alert in promptly identifying potential triggers and proactively managing the risks.
Once a potential regulatory issue is identified, swift and decisive action should be taken. The concerns raised by whistleblowers should be appropriately reviewed, managed, and triaged, to minimize the risk of unnecessary escalation to the authorities. Prompt and independent internal investigations should be conducted where necessary, so that the business can verify the issue or complaint and assess next steps. For sensitive matters, it may be prudent to engage external legal counsel to conduct an internal investigation, and assist the business in navigating any potential interaction with the regulator or enforcement agency.
Businesses should be sensitive to any requests for information or materials from regulators, whether communicated informally or via formal production orders. When such requests are received, relevant personnel (such as in-house counsel) should be involved in managing and coordinating such requests.
Preparation
Businesses should have a dawn raid contingency and preparation plan, to minimize confusion and business disruption if a dawn raid occurs.
Clear “dawn raid manuals, ”which set out the relevant protocols and roles for employees, should be drafted and put in place. From the initial stages of the raid, there should be a designated company contact person or representative to manage raid-related requests or other communications with the authority. The key personnel (such as in-house counsel, and risk, regulatory or compliance staff), who form the company’s “dawn raid core team,” should be pre-designated.
Depending on the relative risk profile of the company’s operations, these should be complemented by training sessions to enhance awareness. Employees should also be trained to timely activate the relevant dawn raid protocols, and observe prescribed rules of engagement with enforcement officers. For example, in most circumstances it would be prudent for employees to direct all raid-related queries to the designated company contact person who is primarily responsible for interfacing with the enforcement officers.
Protocols, manuals and trainings should be customized, based on the respective search and seizure powers and practices under local law. The company’s core response team in each country should also be familiar with the general procedures of a raid, and be able to ascertain the specific scope of the enforcement officers’ powers in relation to the raid conducted.
Protection
Businesses should be mindful of their rights and potential liabilities in a dawn raid scenario, particularly relating to legally-privileged and business-confidential material.
To minimize challenges to the privileged or confidential nature of a document, it is good practice for such documents to be labeled and filed contemporaneously in the usual course of business. For example, electronic documents or data that are legally privileged or business confidential should be contemporaneously identified, labeled, and stored in different folders or cloud systems, to the extent possible, to facilitate subsequent tracking where necessary.
Implications for businesses
As regulatory enforcement actions and inquiries in the Asia-Pacific region increase, businesses with operations in the region should assess their potential exposure to the attendant legal and reputational risks, and adopt policies and practices that can facilitate a well-coordinated response to a raid by the authorities.
Reed Smith LLP is licensed to operate as a foreign law practice in Singapore under the name and style, Reed Smith Pte Ltd (hereafter collectively, "Reed Smith"). Where advice on Singapore law is required, we will refer the matter to and work with Reed Smith's Formal Law Alliance partner in Singapore, Resource Law LLC, where necessary.
- Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators (2019 Measures)) Act 2020.
- Cheung Ka Ho Cyril et al and Securities and Futures Commission [2020] HKCFI 270.
Client Alert 2020-315
