Law firms, accountants and even casinos that do not do enough to prevent fraud, false accounting and money laundering will be targeted in the upcoming Economic Crimes and Corporate Transparency Bill of the government.
British government security minister Tom Tugendhat said the new provision, which will be based on “failure to prevent” offenses for bribery and tax evasion, will now be part of the bill, which is currently going through parliament.
The law has made it easier to prosecute organizations for crimes because prosecutors only have to prove that the organization did not have “reasonable” or “adequate” controls to prevent wrongdoing.
But for white-collar crimes such as fraud by companies, prosecutors must now prove that the “directing thought” in the organization was intended to commit the offense.
Former justice secretary Robert Buckland, who has long pushed for the legislation, said he was “very encouraged by the developments” following the minister’s announcement.
Before the government’s announcement, there was already cross-party support in the UK parliament for Buckland to bring forward an amendment to the bill creating offences. It was also recommended by a House of Lords committee in November.
When Buckland moved to bring up the amendment, Tugendhat said the government would “consider the need” for the legislation and seek advice on “the most effective way to do this”.
Buckland withdrew the amendment after Tugendhat’s assurance.
Tugendhat did not provide details on exactly how the new offense will be formulated. But it is possible that the government would prefer a separate offense for failing to prevent fraud, false accounting and money laundering. The Buckland Amendment has been considered a single offense covering all three areas.
The fraud and false accounting elements of the withdrawn amendment will apply to companies, partnerships or traders based in the UK or doing business in the UK. The provision of money-laundering has specifically covered 11 types of businesses, including credit and financial institutions, accountants and some other esoteric types of businesses such as casinos and art dealers.
Buckland said MPs were pushing to create new offenses and the government was close to agreement on how the legislation should look. “We’re in the same ballpark now,” he said.
The debate on Wednesday focused on whether MPs should also try to push some other provisions into the bill, such as new legislation to prevent abuse of the UK’s libel laws, or seek new legislation in each region. Proponents of including a “failure-to-prevent” offense say it’s better to take the opportunity right away than to wait and try to bring in a new bill.