New criminal offences could be introduced as part of a government crackdown on corporate economic crime – more than three years after a call for evidence.
The Ministry of Justice (MoJ) has announced that UK corporate criminal liability laws are to be reviewed by the Law Commission, following its consultation dating back to 2017.
That consultation was concerned with criminal offences designed to punish and prevent economic crimes such as fraud, false accounting and money laundering when committed on behalf or in the name of companies.
One issue on which responses were sought included whether to extend the ‘failure to prevent’ offence model (which already applies to bribery and tax evasion offences), to other forms of economic crime.
The Law Commission’s review will look at whether existing laws are sufficiently equipped to tackle economic crime; and whether reforms are needed to better hold companies to account for criminal wrongdoing undertaken by them or on their behalf.
Alun Milford, criminal litigation partner at Kingsley Napley, commented: “Three years to consider a consultation exercise, produce a fence-sitting report of 74 paragraphs and then pass the buck to someone else is hardly impressive. So the status quo continues but this issue has not gone away.”
In its response to the call for evidence, the government stated that there was no clear consensus from the respondents on what corporate liability offence should be created if the so-called identification doctrine was replaced.
Out of the 62 respondents, 26 were law firms.
The government found that some responses disclosed significant opposition to reform, while others questioned whether there was a need for further criminal sanctions at all in the already heavily regulated financial services sector.
Neill Blundell, head of corporate crime and investigations at Macfarlanes, said the past few years have seen growing calls for reform of current corporate liability laws.
He explained: “The current framework – which positions ‘failure to prevent’ strict liability offences, contained in the UK Bribery Act 2010 and the Criminal Finances Act 2017, alongside the ageing common law ‘identification principle’ – imposes uneven and complex obligations on businesses, whilst hindering effective prosecution by enforcement agencies.
“The initial call for evidence on this issue by the Ministry of Justice was over three years ago – hopefully this latest review will now lead to the sensible, pragmatic reform that is long overdue.”
Justice secretary Robert Buckland QC said corporate economic crime undermines trust in business, distorts markets and damages people’s livelihoods and futures.
“Firms that aid and abet this behaviour”, he added, “should know that it will not go unpunished and I look forward to the Law Commission’s recommendations on how we can strengthen this area of the law further.”
The Law Commission is expected to present recommendations for reform next year....