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New “failure to prevent” offences in corruption crackdown

18th May 2016

David Cameron has announced the creation of a new corporate offence which will hold banks and multinationals liable for staff fraud as part of the UK”s crackdown on corruption.

Described as being the biggest shake-up of corporate criminal law in a century, the Ministry of Justice is to consult on extending the criminal offence of “failure to prevent” to other economic crimes such as fraud and money laundering so that, as the Prime Minister states, “firms are properly held to account for criminal activity that takes place within them”.

The attorney general, Jeremy Wright QC, noted that “Under existing law, a company only faces criminal liability if prosecutors can prove a sufficiently senior person knew about the criminal conduct” which “can be extremely hard to prove.”

“A new offence could find companies responsible where they haven’t adequately prevented economic crime. The failure to prevent offence would help prosecutors hold companies to account for criminal conduct at all levels of a business and show the public that organisations are not above the law,” Wright continued.

Law firms were said to be well placed to deal with the risks of money laundering and corruption, according to a new report from the Solicitors Regulation Authority (SRA). The report follows visits to more than 250 firms to see what processes were in place to guard against money laundering.

The findings show that, in general, firms have the right systems to manage such risks of corruption and report suspicious activity. It also found a healthy compliance culture embedded in firms.

Paul Philip, the SRA’s chief executive, said: “Law firms are an attractive target for those wishing to launder money. We have done a great deal of work to raise the profile of this risk and promote best practice.”

He went on to say that the report “shows that the vast majority of the firms we visited take their responsibilities seriously and compliance is good.”