On the day of the Global Anti-Corruption Summit taking place in London today UK Prime Minister, David Cameron announced plans for the biggest shake up in corporate criminal liability we have seen to date in an exclusive letter to the Guardian.

Three measures were announced:

1. The creation of a beneficial ownership register
2. The creation of a new Anti-Corruption Co-ordination Centre
3. Plans for a brand new offence of failure to prevent economic crime

It is the new plans for a brand new offence of failure to prevent economic crime that represent ground breaking new legislation and the biggest shake up in corporate criminal law we have seen to date.  It is set to eclipse the impact of the Bribery Act.

At the same time the UK’s Ministry Of Justice issued the following press release:

Failure to prevent economic crime (including money laundering)

“The Ministry of Justice will consult on plans to extend the scope of the criminal offence of a corporate ‘failing to prevent’ beyond bribery and tax evasion to other economic crimes.

Police and other law enforcement agencies can struggle to prosecute corporations for money laundering, false accounting, and fraud under existing common laws.

The consultation will seek views and evidence to assess whether changes in the law could allow the courts to more effectively prosecute corporate economic crime. 

Justice Minister Dominic Raab said: 

The government is finding new ways to tackle economic crime and we are taking a rigorous and robust approach to corporations that fail to prevent bribery or allow the tax evasion on their behalf.

We now want to carefully consider whether the evidence justifies any further extension of this model to other areas of economic crime, so that large corporations are properly held to account.

The consultation, published this summer, will explore whether the ‘failure to prevent’ model should be extended to complement existing legal and regulatory frameworks. 

The consultation follows the recent announcement by the Prime Minister to bring forward a criminal offence for corporations who fail to stop their staff facilitating tax evasion and two recent prosecutions for the offence of failure of a commercial organisation to prevent bribery on its behalf.”

David Green, Director of the SFO said at a conference yesterday:

Section 7 of the Bribery Act should be extended to include a corporate offence on a company for “failing to prevent acts of economic or financial crime by persons associated with it.” 

…”That is the way to get after errant corporations effectively,”

In other developments the UK Prime Minister said:

Beneficial ownership register

…”we will expose corruption, so there is nowhere for the corrupt to hide. Britain is the first country in the G20 to create a public register of beneficial ownership, so we can show who really owns and controls every company.”

International Anti-Corruption Co-ordination Centre

…”we will do everything possible to punish the corrupt and support those affected by corruption. We know that the web of corruption is global, so we will create an international anti-corruption coordination centre to help police and prosecutors work together to pursue the corrupt across borders, joining the dots to identify and prosecute the corrupt and seize their assets, including by using the data made available by registers of beneficial ownership.”

Opinion

The criminalisation of corporate law continues to snowball- these ‘failure-to-prevent’ clauses represent the most sweeping changes to corporate law in over hundred years and a substantial burden for businesses.

The extension to economic crimes such as fraud and money laundering would represent a massive shake-up – even bigger than the introduction of the Bribery Act five years ago.

Hold on to your hats.

It’s coming.