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Economic Crimes

Ministry of Justice

Estimated Completion, Summer 2016

On 13 January 2017 the Ministry of Justice opened a call for evidence concerning criminal offences designed to punish and prevent economic crimes. The call for evidence asked for views as to the suitability and scope that would be most effective. The call for evidence was closed on 24 March 2017. Depending on its outcome, a public consultation on the detail of a firm proposal for reform may be launched.

Failing to prevent

THE PROBLEM

An extension of the scope of the criminal offence of ‘failure to prevent’ to economic crimes such as money laundering or fraud could see company bosses prosecuted for failing to stop their staff from facilitating these crimes. Forcing company bosses and boards to take responsibility for the actions of their employees could significantly alter the corporate culture which too often fosters an enabling environment which allows corruption to persist.

If included in legislation the criminalisation of failing to prevent economic crimes, such as money laundering, would increase the threat of conviction and, as Jeremy Wright noted, might make companies more likely to proactively discourage such offences within the organisation in the first place. And if our gatekeeping institutions are increasingly galvanised to combat money laundering, corrupt elites around the world will have fewer opportunities and avenues for hiding their ill-gotten gains.  Money meant for schools and hospitals overseas would not end up in UK property or in anonymous companies registered in one of our Overseas Territories or Crown Dependencies. Companies can and must play a critical role in reducing the UK’s role as a safe haven for corrupt assets.

WHAT HAPPENED AT THE SUMMIT?

At the Anti-Corruption Summit the UK stated: “the UK is introducing a penalty for UK companies that fail to prevent their employees from facilitating tax evasion, including in other jurisdictions and is launching a consultation on extending this penalty to a wider range of economic crimes, such as money-laundering, fraud and false accounting”. The Ministry for Justice pledged to launch the consultation in summer 2016.

The University College London’s Centre for Ethics and Law also published a “Professional Services Leaders’ Statement of Support for the London Anti-Corruption Summit”, in which signatories stated their commitment to “play our part in efforts to prevent the proceeds of crime and corruption from entering legitimate capital and investment markets,” stating, “the importance of this challenge has never been clearer”.

WHAT HAS HAPPENED SINCE?

The Government opened a call for evidence in January 2017, and said that a public consultation on the detail of a firm proposal for reform may be launched later in the year, depending on the results of the call for evidence.

In April the Criminal Finances Act came into law, which made it a criminal offence for those who fail to prevent their staff from facilitating tax evasion, but did not extend the scope to other economic crimes.