UK: U.K. Guidelines Emphasize Importance Of Robust Programs

In January, the Sentencing Council of England and Wales issued its first set of guidelines applicable to corporate white collar offenders.1 The guidelines, which cover fraud, bribery and money laundering offenses committed by companies, will apply to sentences imposed on or after Oct. 1, regardless of the date of the offense. Given the high-profile fraud and bribery investigations currently being conducted by the U.K. Serious Fraud Office, a U.K. court may soon be called on to apply the guidelines in high-profile matters.

The guidelines provide an unambiguous message to companies regarding the importance of corporate compliance programs, particularly anti-corruption and anti-money laundering systems. The guidelines are clear that companies without these programs are more likely to be prosecuted criminally and receive stiffer sentences. Accordingly, corporations subject to the criminal jurisdiction of the U.K. should review the scope and status of their compliance programs under the guidelines.

Structure Similar to U.S. Version

The guidelines are not mandatory. Instead, they serve as definitive guidance to judges and must be followed ''unless the court is satisfied that it would be contrary to the interests of justice to do so.''2 Thus, the guidelines are similar to the U.S. Sentencing Guidelines which, under recent U.S. Supreme Court precedent, are only advisory for U.S. federal courts.3

The Sentencing Council recognized that monetary penalties are the primary criminal punishment available for use against corporate offenders and indicated that its central goal was to provide a consistent approach in calculating fines.4 The three main principles underpinning the guidelines are the removal of any ill-gotten profits (disgorgement), the imposition of a fine with a ''real economic impact'' on the offender and its shareholders (punishment) and deterrence.5 To implement these three principles, the guidelines establish a multi-step approach to sentencing:

Compensation Order: The court first should consider making a compensation order requiring the offender to pay for any personal injury, loss or damage resulting from the offense. If the offender has limited assets available, payment of compensation to an injured party should take precedence over the assessment of penalties.

Confiscation Order: The court next should consider issuing a confiscation order requiring the offender to surrender any benefit obtained as a result of the offense. Confiscation may be sought at the request of the prosecutor or ordered sua sponte.

Determination of Offense Category: The court then determines the offense category based on an evaluation of ''culpability'' and ''harm.''6 Culpability of a company is ranked using three categories—High, Medium or Lesser—based on the court's assessment of the corporate defendant's role and motivation in the offense. Willful obstruction, coercion and intentional targeting of vulnerable victims are all factors likely to result in a higher culpability ranking. Harm is calculated on the basis of the monetary values involved in the crime, with reference to the underlying offense. In fraud cases, harm will normally be calculated as the actual or intended gross gain to the offender. In bribery cases, harm is calculated as the gross profit from the contract obtained, retained or sought as the result of the corruption. For money laundering offenses, harm will normally be calculated as the amount laundered. Where actual or intended gain cannot be established, the court may use the amount that was likely to be achieved under the circumstances.

Determination of Fine Range: The court establishes a starting point for the fine range by using the culpability ranking and harm value, and then adjusts the range upward or downward through the application of certain enumerated aggravating and mitigating factors. Aggravating factors can include, among others, substantial harm having been caused to markets or governments, crimes that occur across borders, previous convictions and the establishment of a corporate subsidiary for the sole purpose of committing fraudulent activity.7 Mitigating factors can include, among others, the lack of previous convictions or crimes, corporate cooperation with investigators, new management and little or no actual gain from the offense.8 Using the guidelines' matrix, fines can range from 20 percent to 150 percent of the harm amount for lesser-culpability offenders, 100 percent to 300 percent for medium-culpability offenders and 250 percent to 400 percent for high culpability offenders.

Fulfillment of Guidelines' Principles: The court has discretion to adjust the fine upward or downward to fulfill the guidelines' principles of disgorgement, punishment and deterrence. Factors for consideration include the company's ability to make restitution to victims, the impact of the fine on the company's ability to implement an effective compliance program, and the impact of the fine on the employment of staff, service users, customers and the local economy.9 The guidelines accept the possibility that in egregious cases a fine may result in the insolvency of the defendant— the equivalent of a corporate death sentence. Conversely, companies that cooperate by assisting the prosecutor or investigator may be considered for a reduced fine.

A Deferred Prosecution Agreement is a court-approved agreement made between a prosecutor and defendant, under which a criminal prosecution is deferred pending compliance with certain terms and conditions. The use of DPAs in resolving criminal cases against corporations accused of financial fraud, bribery or similar financial crimes was introduced in the U.K. in April 2013.10 Under the new law, negotiated DPA conditions may include the payment of financial penalties that should be comparable to the fine that likely would be imposed following a conviction after a guilty plea. U.K. prosecutors were authorized to begin using DPAs as of Feb. 24.11

Guidelines Help Predict Penalties

Because a DPA is not a criminal conviction for purposes of the guidelines, reference to the guidelines is not mandatory for judges reviewing DPA terms and conditions that have been agreed to by prosecutors and defendants. Notwithstanding this limitation, the Sentencing Council indicated that it anticipated the use of DPAs in the U.K. in the future and that it intended the guidelines to assist judges, prosecutors and defendants in the calculation of negotiated DPA penalties.12 Accordingly, companies should look to the guidelines both as a predictor of the range of potential DPA penalties and as the road map that U.K. prosecutors and courts will follow in determining how severely or leniently to treat them during negotiations. Marshaling arguments that are tied to the guidelines' principles, while downplaying aggravating factors and emphasizing mitigating factors, are likely to be the most productive strategies companies can pursue in negotiating for favorable DPA terms.

Corporate compliance programs are likely to play a central role in both negotiated DPA resolutions and judicial sentencing under the guidelines. First, from a U.K. prosecutor's view, the existence of a robust compliance program should be given weight in deciding whether to resolve a criminal investigation through a DPA. The SFO's Code of Practice for Deferred Prosecution Agreements states that one factor to be considered in favor of pursuing a DPA is ''the existence of a proactive corporate compliance program both at the time of offending and at the time of reporting but which failed to be effective.''13 In contrast, pursuing a criminal prosecution is appropriate where the crime was ''committed at a time when [the offender] had no or an ineffective compliance program'' and ''has not been able to demonstrate a significant improvement in its compliance program since then.''14

Prevention Can Pay Off

Second, the guidelines highlight the importance of anti-corruption and anti-money laundering compliance systems by directing courts to evaluate these programs during their culpability and harm assessments in the sentencing phase. In assessing culpability in bribery cases, a company can receive a ''lesser culpability'' determination if the court finds ''some effort made to put bribery prevention measures in place but insufficient to amount to a defense.''15 Alterna-tively, a ''high culpability'' assessment should be made against defendants that demonstrate a ''culture of willful disregard of commission of offenses by employees or agents with no effort to put effective systems in place.''16 In quantitative harm assessments in bribery cases, an alternative measurement for harm caused by bribery under the U.K. Bribery Act 2010 is the cost that a company avoided in failing to put in place appropriate measures to prevent bribery. Similarly, in money laundering cases, an alternative harm measurement can be determined by the amount the defendant avoided in failing to implement an effective anti-money laundering program.17 Although the guidelines do not explicitly reference the existence or nonexistence of a corporate compliance program as a mitigating or aggravating factor in sentencing, the guidelines are clear that its enumerated list of factors is not exhaustive.18 In addition, in determining whether the proposed fine fulfills the guidelines' principles, the court will examine the impact of the fine on the company's ability to implement an effective compliance program.19 Thus, corporate defendants should have several opportunities, beyond the court's culpability and harm assessments, in which to present their compliance program as a potentially mitigating factor. Of course, this mitigation argument will be only as strong as the program being described.

Expect More U.K. Prosecutions

The issuance of the guidelines, the introduction of DPAs, the passage of the U.K. Bribery Act 2010 and the recent high-profile investigations launched by the SFO all point to the U.K. government's increased emphasis on white collar corporate prosecutions. Like their counterparts in the U.S., courts and prosecutors in the U.K. are being armed with a variety of tools to investigate, prosecute and resolve white collar criminal cases against companies. If the U.S. enforcement environment is an example, as U.K. prosecutors become increasingly adept at the use of these tools and their legality and scope are established by the U.K. courts, we should expect to see more corporate prosecutions, faster resolutions through negotiated outcomes and the assessment of higher penalties. Companies should respond to this changing U.K. environment by continuing to implement robust compliance programs that can be presented to U.K. courts and prosecutors in support of a DPA resolution or a request for sentencing leniency.


1 ''Fraud, Bribery and Money Laundering: Corporate Offenders Definitive Guideline,'' available at . Separate guidelines applicable to individual offenders are expected to be released by the Sentencing Council later this year.

2 Section 125(1), Coroners and Justice Act (2009).

3 See United States v. Booker, 543 U.S. 220 (2005) (rendering the sentencing guidelines ''effectively advisory'' rather than mandatory).

4 ''Fraud, Bribery and Money Laundering: Response to Consultation,'' January 2014, available at .

5 Guidelines, supra note 1 at 8.

6 Id. at 5.

7 Id. at 6.

8 Id.

9 The guidelines do not distinguish between the culpability of management and that of shareholders. Although the guidelines require the court to consider the impact of the fine on the employment of staff, service users, customers and the local economy, the guidelines explicitly state that any impact on shareholders is not a factor for the court to consider. Id. at 8. Accordingly, under certain circumstances, the guidelines' policies could diverge from the mandate of the U.S. Securities and Exchange Commission, the hallmark of which is the protection of investors (i.e., shareholders). It remains to be seen how (or whether) this divergence will be resolved in cases where a defendant corporation is subject to the jurisdiction of both the SFO and the SEC.

10 Schedule 17, Crime & Courts Act (2013) available at .

11 ''Deferred Prosecution Agreements Code of Practice,'' Serious Fraud Office, available at (hereinafter ''DPA Code of Practice'').

12 ''Fraud, Bribery and Money Laundering: Response to Consultation,'' January 2014, at 2, available at .

13 DPA Code of Practice, supra note 11, at Section 2.8.2.iii.

14 Id. at Section 2.8.1.iii.

15 Guidelines, supra note 1 at 5.

16 Id.

17 Id. This alternative harm calculation applies to money laundering schemes only if the amount avoided by failing to establish an anti-money laundering program is higher than the amount of money laundered.

18 Id. at 6.

19 Id. at 8.

Reproduced with permission from Prevention of Corporate Liability, 22 Prev. Corp. Liability 32, 03/17/2014. Copyright _ 2014 by The Bureau of National Affairs, Inc. (800-372-1033)

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.