The Economic Crime and Corporate Transparency Bill is before Parliament. It contains two significant changes to hold corporations accountable for economic crimes.
The legislation significantly expands the circle of persons whose criminal actions will be reflected on the company. The new law will make companies liable for economic crimes committed by “senior managers,” defined as individuals who play a significant role in a company’s operations.
It also introduces a new offense of failing to prevent fraud. A large organization that fails to prevent fraud by an associated person will be considered to have committed a crime under the new law.
To provide effective protection, a company must demonstrate that it has sufficient procedures in place to prevent fraud. Thus, the law actually requires expansion of compliance in companies. The “non-prevention” model is already applied to bribery and tax evasion.
While expanding the identification principle will make things easier for prosecutors, the UK law is still significantly narrower than the US model, in which virtually all employees’ criminal acts committed in the course of their employment are attributed to the corporations for which they work.