The Economic Crime and Corporate Transparency Bill (ECCT Bill) is now in its final stages through parliament and the Government remain confident that it will get royal assent and come into force by the end of this year.
The ECCT Bill is incredibly wide-ranging from the reforms to Companies House through to the additional powers to seize and recover criminal crypto assets. However, it is the introduction of the failure to prevent fraud offence and the extension of corporate liability for all economic crimes committed by a company's senior manager that means the ECCT Bill will represent the biggest legislative shake up in the UK since at least the Bribery Act in 2010.
Failure to prevent fraud offence
Under this offence, a company will be automatically liable if an employee or third party acting on its behalf commits external fraud (not fraud against the company itself). It will be a complete defence for the company to show that it had in place at the time of the offence reasonable preventative procedures, or that it was reasonable not to have any preventative procedures.
The Government will issue guidance on what they expect reasonable procedures to be, but companies can get ahead now by looking at the guidance issued for the similar bribery and tax offences.
How TLT can help you prepare
- Assessment of the risk of outward fraud being committed by associated persons.
- Map out your existing fraud controls and complete a gap analysis against the level of reasonable preventative procedures.
- Drafting or updating your policies and procedures.
- Associated persons review.
- Implementing the new or revised policies and procedures and delivering training.
- Provide sessions with senior management to discuss expectations within your firm.
Extension of corporate liability
The extension of corporate liability will make it easier for law enforcement for prosecution of economic crimes committed by its senior managers. Specifically, companies could face prosecution for money laundering, bribery, tax evasion, sanctions violations and terrorist financing offences committed by senior managers.
Unlike the failure to prevent offences, there will be no statutory defence for companies. A company will have to rely on its compliance programme to prevent such incidents from occurring, or using them to mitigate its penalty. Now is the time to review and refresh your economic crime compliance programmes.
How TLT can help you prepare
- Economic crime risk assessments.
- Reviews and benchmarking of existing economic crime compliance programmes.
- Operational effectiveness reviews of existing economic crime compliance programmes.
- Review of existing policies and procedures.
- Updating training and communications.
- Offer full support in investigations and defending prosecution.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
