The UK government is preparing new provisions that would introduce a criminal corporate offence targeting commercial organisations for ‘failure to prevent’ fraud, money laundering and false accounting, writes David Little, a partner in our Corporate and Commercial Law team.
As a Commercial Law practitioner I can see the amendments to the Economic Crime and Corporate Transparency Bill, currently making its way through Parliament, will significantly reinforce the ‘failure to prevent’ offences for bribery and tax evasion of particular interest to Company Secretaries and their risk management teams.
UK government security minister Tom Tugendhat confirmed in parliament in January that the government intends to include a corporate ‘failure to prevent’ offence in the Economic Crime and Corporate Transparency Bill that is currently being debated by the House of Commons.
As the government says on its website, “The UK has one of the world’s largest and most open economies, making it an attractive place for global business. However, this same openness exposes the UK to the risk of bad actors taking advantage, including to perpetrate fraud and money laundering, which, in turn, funds serious and organised crime here in the UK, and facilitates corruption overseas. The threat of illicit finance undermines legitimate business and impacts on everyday society and all citizens’ lives.”
The government moved quickly in light of Russia’s invasion of Ukraine to crack down on dirty Russian money in the UK, and other foreign elites abusing our open economy, through the Economic Crime (Transparency and Enforcement) 2022 Act (the “ECTE Act”).
The Economic Crime and Corporate Transparency Bill will deliver:
- Companies House reform
The bill will reform the role of Companies House and improve transparency over UK companies and other legal entities in order to strengthen our business environment, support our national security and combat economic crime, whilst delivering a more reliable companies register to underpin business activity.
- Strengthen anti-money laundering powers
The bill will enable better information sharing on suspected money laundering, fraud and other economic crimes. It should be easier for businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime.
- Focus private sector and law enforcement resources on high value activity
The government is keen to reduce the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering (DAML) SAR.
For once I’m in favour.
Contact our Corporate & Commercial team
David Little is a Partner at Bishop & Sewell in our expert Corporate & Commercial team. If you would like to contact him, please quote Ref CB379 on either 020 7631 4141 or email firstname.lastname@example.org.
The above is accurate as at 07 February 2023. The information above may be subject to change during these ever-changing times. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.