Earlier this year, former Prime Minister David Cameron announced that the Government would consult on creating a new offence of failing to prevent economic crime. It appears that momentum is once again gathering behind the proposed new offence with the consultation process to begin shortly.

SPEED READ

1. If a controversial new law is introduced in the UK, all companies with a connection to the UK will potentially be made liable for acts of “economic crime” committed anywhere in the world by their “associated persons”.
2. The UK’s Attorney-General, Jeremy Wright QC, said last week at a symposium on economic crime in Cambridge that the Government would consult on plans to introduce legislation which makes companies liable for a failure to prevent economic crime.
3. “Economic crime” is likely to be broadly defined to include offences such as;
   1. fraud
   2. theft
   3. false accounting
   4. forgery
   5. destroying company documents
   6. money laundering
   7. handling the proceeds of crime etc.
   8. plus a range of offences under the Financial Services and Markets Act 2000.
4. If implemented, the new offence is likely to resemble section 7 of the UK Bribery Act 2010 by making companies criminally liable for acts of their “associated persons”.
   1. Associated persons are likely to be defined as anyone who provides services for or on behalf of the company, anywhere in the world, e.g. employees, subsidiaries, agents, intermediaries and contractors, joint venture partners, etc.
5. It is expected that the legislation will have broad extra-territorial effect and will apply to crimes committed by an associated person anywhere in the world.
   1. It is also likely that the legislation will apply to any company that is incorporated in the UK or any company that conducts business, or part of a business, in the UK (e.g. via a subsidiary, sales operations, a representative office or even simply as a result of a listing on the London Stock Exchange).
   2. This means that companies based outside the UK can be prosecuted in the UK.
6. Jeremy Wright QC said that “When considering the question ‘where does the buck stop?’ and who is responsible for economic crime, it is clear that the answer is to be found at every level, from the boardroom down”.
7. According to an article on the front page of “The Times” on 12 September 2016, a government source has confirmed that the consultation document will soon be released.

To view this DLA PIPER article in full, please click here: http://bit.ly/2cC2suv