New criminal finance bill targeting Employers

Prime Minister Theresa May is pushing forward an expansion of current legislation to target white-collar crime originally proposed by former PM David Cameron in May. The proposed plans are intended not only to encourage bosses to do more to prevent staff from engaging in fraud, but also promote a culture of corporate responsibility so that threats are eliminated prior to taking root in an organisation.

The new plans have been widely endorsed. The announcement by Attorney General for England and Wales, Jeremy Wright, that the range of economic crimes will expand to cover money laundering and false accounting was echoed by the director of the Serious Fraud Office, David Green QC, and also by Shadow Attorney General Emily Thornberry. Both have advocated extending the offence to capture a company’s failure to prevent financial crime including money-laundering, false accounting and fraud.

The change in legislation would put the UK in line with countries such as the USA and Australia, which have had similar legislation in place for quite some time.

Australia in particular, introduced corporate criminal laws similar to those now being proposed in the UK some 20 years ago. The Australian model is based on “organisational liability” and stipulates that companies are criminally liable for failing to maintain a compliant corporate culture.

Under present UK laws, courts apply the ‘identification principle’, which means that companies will be liable if it can be proved that the individual directly involved in offences is a senior member of the organisation, usually close to or at board level, and is the controlling mind behind the company’s affairs.

In practical terms, the effect of this is that in order to prosecute a company for a criminal offence involving a psychological element (for example theft, which requires proof of dishonesty), it is necessary to prosecute and convict a very senior individual within the company. By the nature of this law, prosecutions in such scenarios are difficult to bring to court.

An exception to the identification principle was achieved via Section 7 of the Bribery Act 2010, which established a strict liability offence for a company’s failure to prevent bribery. The offence is tempered by a defence if the company can establish that adequate procedures were in place to prevent the conduct from occurring.

Similar to the exception found in the Bribery Act, to mitigate the threats of prosecution under the new finance bill, employers will likely be required to take adequate procedures to prevent the range of offences occurring in the first place. These steps could include employers:

• Reviewing their anti-fraud and corruption Policy including their staff codes of conduct
• Undertaking regular anti-fraud training with all members of staff including senior executives and board members
• Undertaking regular audits
• Implementing effective whistleblowing procedures to encourage all staff to report wrongdoing in their organisation

Many employers are increasingly turning to independent and external whistleblowing service providers to enhance their anti-fraud measures and prevent the types of offences that are being introduced in this new bill.

If you would like a cost effective quote for our whistleblowing service please follow this link and provide the requested information or alternatively please contact Sean McAuley, the SeeHearSpeakUp Senior Fraud Service Manager by contacting him directly on 01224 049449.