LONDON—The U.K. Serious Fraud Office knows it is in a delicate position these days. Still, that's not to say the SFO is in a weak position, and compliance officers ignore that distinction at their peril.

At least, that's my impression after a recent interview with one of the agency's top prosecutors: Ben Morgan, appointed to the SFO last summer as head of its anti-corruption enforcement unit. We talked about a wide range of subjects, from possible guidance from the SFO (don't exect much of it), to self-disclosure of misconduct (do more of it), to how judges will review deferred-prosecution agreements under the Bribery Act (more unpredictably than judges here). Two things became apparent in our conversation.

First, Morgan expects the SFO to play a stronger role in rooting out corporate corruption. The agency now has the legal tools it needs to dispose more cases of corporate corruption, its director David Green has vowed to use them, and Morgan wants to carry out that mission.

Second, the SFO knows its reputation with the public, which isn't good. 2013 was a painful year for the agency. It saw a major case against Alcoa unravel in December when a witness recanted his testimony. It was sued by the targets of another botched case against Kaupthing, a bank in Iceland. Police are investigating $1.5 million in undisclosed severance payments Green's predecessor made to employees. And to start off 2014, in January the SFO had to ask Parliament for a supplemental budget because it was running out of money to do its job.

None of those flops were Morgan's fault. They do, however, leave him and his colleagues eager to change the perception that the SFO is inept and under-funded.

Hence the SFO's its delicate position: it has the means to prosecute corruption more efficiently, and the political incentive to do so. But it must strike the right balance between too aggressive and too passive, to demonstrate to the public that it can wield its new powers competently.

Enter a company under SFO scrutiny, escorted by the compliance officer.

“If a corporation becomes aware of some sort of wrongdoing somewhere in its business, and recognizes that it needs to resolve that, it really has to be frank and open with us,” Morgan said. “If they present some kind of sanitized version and hope that we'll take a view quickly on it and dispense a minor outcome or leave the matter alone, that won't happen.”

Compliance officers will be the ones having those frank and open conversations with Morgan. In February the SFO finally won permission to start striking deferred-prosecution agreements with corporate defendants, a new mechanism under British law. Until now, if a company self-disclosed misconduct, it invited expensive litigation and trial, because the SFO had few choices other than to prosecute a case.

OK, I asked Morgan, that obstacle is now gone. So is he sitting there, fingers drumming on the desk, expecting companies to start disclosing more often?

“Yes,” he said. (Any time a regulator gives a clear answer, take him seriously.)

That said, Morgan understands the angst that happens before a decision to self-disclose. That decision will be even more difficult in Britain for a while yet, since DPAs are so new and British judges play a much more active role in reviewing settlements than judges here in the United States.

“I'm very sympathetic” to the uncertainty about when to self-disclose, he said. “There is no hard-and-fast rule, and it's a very difficult judgment to make.” Morgan's only warning: the sooner the better, because if the SFO gets wind of an issue and begins investigating before you self-disclose, your ability to score cooperation points plunges. In those cases, he said, “I don't think the public interest would favor us doing anything other than prosecute.” Given the SFO's past history, I agree.

Compliance officers can expect a more uncertain experience thanks to the fussy habits of British judges, who have had no qualms about blocking corporate plea deals in the past. That may change with the SFO's new powers to strike deferred-prosecution deals; regardless, the British process is “a very meaningful intervention at the judicial level,” Morgan said. “Without that, a DPA simply won't go ahead.”

Compliance officers and the SFO, then, are in an awkward relationship. You need to be frank with Morgan and his colleagues to get a more favorable settlement, and they need you to be frank if they hope to demonstrate that they can employ DPAs wisely.

Sure, the SFO could always go full-bore and prosecute a corporate malfeasant to the fullest, but that hasn't worked out well for the agency before, and it can't easily get the budget for that. The SFO needs deferred-prosecutions to become a successful tool for disposing of corruption cases—and it needs cooperation from you for that to happen. Morgan did not say that outright, but it's the reality.

“I see [DPAs] as something that the reporting company and the SFO very much have to work in partnership on, to make sure the company has been frank with us, to make sure we've reacted proportionately to the criminality, such that a judge is satisfied … to dispose of the matter through a DPA rather than a prosecution,” Morgan said. “And I think that's going to be a really high bar. That's why the level of frankness that has to be demonstrated. It's not even frankness that has to be demonstrated to us; it has to be demonstrated to the court.”

And if the court isn't convinced, the DPA will be DOA. “That won't be the SFO's decision,” Morgan stressed.

“There will be a bank of precedents one day,” he continued, “but for now both we and the reporting companies have to find our way on this.”

I wholly agree.

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