Spotlight on Corruption, a UK-based anti-corruption charity, has published a review titled Power Without Responsibility. The Review raises concerns that the UK's top enforcement authorities are struggling to achieve successful and proportionate prosecutions of senior executives at large companies for financial crime offences. Some notable statistics from the Review include:

  • In 20 corporate convictions / Deferred Prosecution Agreements with corporates, the Serious Fraud Office (SFO) has only successfully prosecuted two senior executives for their involvement in the matters under investigation.
  • The Financial Conduct Authority (FCA) has issued 17 banks with fines amounting to £777 million for money laundering failures, but has only taken regulatory action against one individual in relation to these cases.
  • Following 11 prosecutions of corporates, the Competition and Markets Authority has not prosecuted any board-level senior executives at those firms.
  • Directors of small and medium-sized enterprises are far more likely than senior executives in large firms to face conviction and regulatory fines, with only 6% of individual convictions secured by the FCA involving senior executives at large firms.

The findings of the Review highlight the challenges the UK's regulators and enforcement authorities have faced to date in successfully prosecuting economic crime in Britain. This is worth considering in the context of Transparency International's recently released 2023 Corruption Perceptions Index, which showed the UK's perceived corruption risk rating increase for the second consecutive year (see our separate Viewpoint on the latest rankings).

Nick Ephgrave, the (relatively) new Director of the SFO, acknowledged these challenges as he seeks to stamp his mark on the SFO. In his first public speech in the role, on 13 February, Ephgrave highlighted the potential benefits to the SFO of the new Economic Crime and Corporate Transparency Act 2023 (see our Viewpoint on the key takeaways from the speech).

Key amongst the opportunities afforded to the SFO by the Act is the introduction of a new attribution principle (S.196) for economic crimes including, among many others*, primary offences of the UK Bribery Act 2010. This principle replaces the "directing mind and will" attribution principle for specified economic crimes with a simpler and broader principle that attributes criminal liability to corporates where their senior mangers ** commit economic crime while acting within the scope of their authority at the corporate.

This change will expand the range of senior executives and employees whose actions may trigger corporate liability. It is also likely that the change may incentivise the attempted prosecution of this broader range of senior executives and employees for the wrongdoing underlying successfully prosecuted cases of corporate criminal liability under the newly reformed regime.

Cameron Grabowski, Trainee, also contributed to this article.

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* Other specified offences listed in Schedule 12 of the Act include, but are not limited to, specific offences under the Financial Services and Markets Act 2000, Proceeds of Crime Act 2002, Fraud Act 2006, Financial Services Act 2012 and Sanctions and Anti-Money Laundering Act 2018.

** "Senior Manager" is defined as an individual who plays a significant role in the making of decisions about how the whole or a substantial part of the activities of the body corporate or (as the case may be) partnership are to be managed or organised, or the actual managing or organising of the whole or a substantial part of those activities.

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