Failure to prevent fraud law to be a prosecutable offence
Laws being proposed by the government in the Economic Crime and Corporate Transparency bill include a newly created offence of ‘failure to prevent fraud’ as well as greater powers for the SRA to crack down on matters relating to economic crime. The bill has now had its third reading in the House of Commons and it will go to the House of Lords for consideration.
If passed in its current form, the statutory upper limit or cap on the Solicitors Regulation Authority (SRA) in cases related to economic crime would be removed, with the current £25,000 fining limit deemed insufficient to act as a deterrent.
The government wants to “align the SRA more closely with other regulators to ensure the SRA has the necessary enforcement powers and can levy financial penalties that act as a credible deterrent in relation to economic crime matters”
Also this week amendments were added to give the SRA more power to allow it to demand information from solicitors and law firms which goes beyond current money laundering measures and addresses matters of economic crime more widely.
Amendments were also proposed to create a new offence of corporate ‘failure to prevent’, making it a prosecutable offence rather than a regulatory matter, although at this stage it is not clear whether the proposal is a single offence covering all three areas, or individual offences of a failure to prevent fraud, false accounting and money laundering as separate matters. The amendment, put forward by Robert Buckland, former lord chancellor and justice secretary, would have applied to all companies and partnerships in the UK, although he withdrew his specific amendment after assurances from the government that these new proposals would be included.
The bill also makes provisions for increased powers for Companies House, as well as
- reforms to prevent the abuse of limited partnerships
- additional powers to seize and recover suspected criminal cryptoassets
- reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime
- new intelligence gathering powers for law enforcement and removal of nugatory burdens on business.
While these proposals are not yet currently law, it is advisable that continued and increased due diligence is carried out in relation to preventing fraud and ensuring anti money laundering training and policies are relevant and up to date.
Posted on 01/30/2023 by Ortolan