The UK Bribery Act 2010 broke new ground by expanding corporate liability beyond the traditional "directing mind" model and establishing strict corporate criminal liability for the wrongful acts of an "associated person," albeit subject to an affirmative compliance defence. This new model, although so far only modestly used in corruption cases, appears to have won supporters in the UK Government who intend to expand it beyond the corruption context. Following a public consultation in the early part of last year, in October 2016, the UK Government presented its Criminal

Finances Bill ("Bill") to Parliament.

The Bill introduces two new criminal offences for a body corporate or partnership (referred to in the Bill as a "relevant body"), wherever incorporated or formed: (i) of failure to prevent the facilitation of UK tax evasion offences; and (ii) of failure to prevent the facilitation of foreign tax evasion offences by a person with whom the relevant body is associated, provided that the person commits the facilitation of tax evasion offence in their capacity as the relevant body's associated person.

The Bill is expected to pass through the House of Commons (the lower chamber) in Q1 2017 before being introduced in the House of Lords (the upper chamber). It is not expected to come into force before Q3 2017 at the earliest.

On 13 January 2017, the UK Government published its long-awaited consultation on the merits of expanding the corporate economic crime offences beyond failing to prevent bribery and the facilitation of tax evasion offences, in order to better hold companies to account for the criminal wrongdoings of their employees, agents and representatives.

The Rt Hon Sir Olver Heald QC, Justice Minister, noted the importance of ensuring that corporates are:

"properly held to account for criminal activity that takes place within them, or by others on their behalf and at their behest. It is equally important to foster and promote economic crime prevention as part of corporate good governance. Good corporate governance is a means to create a business environment of trust, transparency and accountability in order to promote investment, financial stability and sustainable economic growth."

At present, corporate criminal liability for economic crime is governed by common law rules, known collectively as the "identification" doctrine, which require prosecutors to show that those individuals who are the "directing mind" of the company knew about, actively condoned or played a part in the offending. As part of the consultation, the Government is seeking evidence on the extent to which the identification doctrine may be "hindering effective criminal law enforcement".

In its consultation paper, the Government proposes 5 options:

  • Amending, but not abolishing, the identification doctrine.
  • Creating a strict (vicarious) liability offence. This would make companies guilty, through the actions of their employees, agents or representatives, of the substantive offence, without the need to prove any fault element (such as knowledge or complicity at the companies' centres).
  • Creating a strict (direct) liability offence. This would focus on the responsibility of companies to ensure that offences are not committed in their names or on their behalves. Companies would be convicted without the need for proof of any fault element of an offence comparable to breach of statutory duty to ensure that economic crime is not committed in their names or on their behalf. A strict direct liability offence might be accompanied by, and subject to, a due diligence type defence, similar to section 7 of the Bribery Act 2010 and the Criminal Finance Bill.
  • Having "failure to prevent" as an element of the offence.
  • The Government is also investigating the possibility of introducing regulatory reform on a sector by sector basis.

It is anticipated that the economic crimes contained in any new legislation will include the most common and serious economic crime offences, such as common law conspiracy to defraud, fraud, false accounting and money laundering. Other offences may also include aiding and abetting, statutory conspiracy, attempt and assisting and encouraging the economic crime offences.

The consultation closes on 24 March 2017. The Government expects to publish its response during summer 2017. The consultation document can be accessed below:

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