What's on Practical Law?

Criminal Finances Bill in the making

Practical Law UK Legal Update w-003-4480 (Approx. 4 pages)

The Attorney General made reference to the expansion of corporate criminal liability in a speech at the Cambridge Symposium on 5 September 2016 which was intended to enhance the UK’s reputation in the fight against fraud and help to promote improved corporate governance.
The Attorney General made reference to the expansion of corporate criminal liability in a speech at the Cambridge Symposium on 5 September 2016. He said that the Government will soon consult on plans to extend the scope of the criminal offence of a corporation "failing to prevent" offending beyond bribery to other economic crimes, such as money laundering, false accounting and fraud.
The Criminal Finances Bill was referred to in the Queen's speech at page 51 and referred directly to David Cameron's speech at the Anti-Corruption Summit in London. For more information on the Prime Minister's speech, see Blog post, Foothills success for failure to prevent ahead of the summit.
David Cameron referred to an intention to consult on extending the criminal offence to failure to prevent but no consultation has begun.
This was an interesting development because the failure to prevent had been dropped only 8 months before.

Chronology of the failure to prevent offence

16 July 2015
The government published four consultation documents as part of its strategy to tackle offshore tax evasion. The consultation documents propose strengthening current civil penalties, introducing a new civil penalty for those who enable offshore tax evasion and introducing two new criminal offences (see Legal update, Tackling offshore tax evasion: HMRC publishes four consultations).
29 September 2015
Justice minister Andrew Selous stated in an answer to a written question submitted by Conservative MP Byron Davies that the Ministry of Justice had decided to stop work on the lauded failure to prevent economic crime offence. For more information, see Blog post, Failure to prevent economic crime fails to get off the ground.
29 March 2016
The Finance Bill 2016 introduced three new criminal offences, tackling tax evasion and avoidance to take effect at a date after April 2017. No provisions were introduced for a new corporate criminal offence of failure to prevent the facilitation of tax evasion (see Legal update, New tax offences in the Finance Bill 2016).
11 April 2016
The Prime Minister’s Office announced that the introduction of the corporate liability offence of failing to prevent employees facilitating tax evasion will be brought forward from the proposed introduction date. This was said to be in anticipation of the London Anti-Corruption Summit, which is intended to ramp up global action to expose, punish and drive out corruption.
This offence was excluded from the Finance Bill 2016, although it had been included in the consultation (see Legal update, New tax offences in the Finance Bill 2016).
11 May 2016
David Green repeated his request for the expansion of the failure to prevent offence at the Tackling Corruption Together Commonwealth conference, a conference for civil society, business and government leaders.
18 May 2016
The Queen's speech sets out the intention to introduce legislation to tackle corruption, money laundering and tax evasion. For more information, see Legal update, Queen's speech proposals relevant for business crime practitioners.

What will the Criminal Finances Bill contain?

The purpose of the legislation is to allow the Government to recoup more criminal assets by reforming the law on proceeds of crime, including provisions to strengthen our enforcement powers and protect the public.
The other purposes of the legislation were described as:
  • To implement a more effective regime to support the reporting of suspicious financial activity.
  • To make it easier to seize illicit funds.
  • To improve coordination between the public and private sectors to tackle criminal financial behaviour.
These changes are intended to assist the Government to achieve its manifesto pledge to crack down on tax evasion and tackle economic crime.
The main elements of the Bill will be:
  • The introduction of a criminal offence for corporations who fail to stop their staff facilitating tax evasion.
  • Improving the operation of the Suspicious Activity Reports (SARs) regime to encourage better use of public and private sector resources against the highest threats; to target entities that carry out money laundering instead of individual transactions; and to provide the National Crime Agency (NCA) with new powers.
  • Improving the ability of law enforcement agencies and courts to recover criminal assets more effectively, particularly in cases such as those linked to grand corruption.
The new offence, announced by David Cameron, of failing to prevent other economic crimes of fraud and money laundering, are not mentioned in the Queen's speech.
The Attorney General stated last week that he is still planning to consult on the expansion of corporate criminal liability through the failure to prevent offences. There is no timetable for when this consultation will take place. If it operates in the same way as section 7 of the Bribery Act 2010, companies will face large fines following conviction for failure to prevent, but a deferred prosecution agreement would be available as an alternative disposal.
End of Document
Also Found In
Resource ID w-003-4480
© 2024 Thomson Reuters. All rights reserved.
Published on 14-Sep-2016
Resource Type Legal update: archive
Jurisdictions
  • England
  • Wales
Related Content