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New crackdown on corporate economic crime

The MoJ announces a new crackdown on corporate economic crime and puts out a call for evidence to help deliberations on whether new legislation is needed.

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Possible new laws

Earlier this month (13 Janaury 2017), the MoJ issued a press release announcing that new laws will be considered as part of a crackdown on corporate economic crime.

The MoJ has issued a call for evidence to seek views on whether further reform is needed to combat corporate criminality, following fraudulent, dishonest activity by some banks and other commercial organisations.

Under existing laws, enforcement agencies can struggle to prosecute corporations for criminal offences such as fraud, money laundering and false accounting.

Justice Minister Sir Oliver Heald QC said:

Corporate economic crime undermines confidence in business, distorts markets, and erodes trust.

Companies must be held to account for the criminal activity that takes place within them.

I want to restore public faith in business and make sure we have the right tools available to crack down on corporate criminality.

The press release says that the government will consider whether existing laws sufficiently hold companies to account for the criminal wrongdoing of their staff. For example, it will look at whether successful convictions are being hindered by prosecutors needing to prove the “directing mind and will” of businesses undertaking criminal activity.

This is the latest in a series of moves to repair trust in business and improve accountability, including measures in the Financial Crime Bill to penalise firms who fail to prevent staff conducting tax evasion.

The press release argues that the issue is whether there is potential for reform of the law, in areas of economic crime other than bribery and tax evasion, so as to provide a just and proportionate method of holding companies to account.

The MoJ is  seeking evidence of corporate crime going unpunished because of the problems caused by the “identification” doctrine and also wants to explore the costs and benefits of further reform, against the background of the significant changes that have already been made to tackle misconduct in some sectors.

The call for evidence seeks views on:

  • whether the need to prove the involvement of a “directing mind” in corporate offending is hindering the prosecution of companies for wrongdoing
  • alternatives to proving “directing mind” complicity in corporate criminal conduct, including:
    • a US-style ‘vicarious’ liability offence, making companies guilty through the actions of their staff, without the need to prove complicity
    • the failure to prevent model, whereby a company is liable unless it shows it has taken steps to prevent offending
    • the benefits of strengthening regulatory regimes.

The call for evidence is being conducted via an online survey

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