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Government anti-corruption drive to target UK corporations

12 May 2016
The Prime Minister today announced plans to introduce new offences targeting corporations who fail to prevent fraud and money-laundering, removing the need to prove that a ‘controlling mind’ within the company is directly linked to the offending.

Details of the proposals are not yet available but these new offences are likely to follow the examples of the Bribery Act 2010 and the proposed new offences of failing to prevent tax evasion, currently under consultation.

If that is the case then, when any employee, contractor or other associated person commits a fraud or money-laundering offence, the prosecution will not be required to prove any failings on behalf of the corporation. Instead, companies will be required to show that they had in place all reasonable prevention procedures.

The existing offences and proposals also target UK corporations that fail to prevent illegal acts abroad and, given the Prime Ministers call for a global approach to tackling corruption, it is likely that these new offences also will. This will require careful consideration by UK companies who employee contractors in other countries, where monitoring their activities can be challenging.

Whilst bribery and tax evasion offences are likely to affect only a small proportion of UK corporations, and generally larger or specialist financial institutions, the potential for fraud or money-laundering in almost any business means that today’s announcement may have much wider ramifications for business.

These proposed new offences come alongside government plans to require greater transparency in corporate property ownership including a consultation on requiring companies to prove that legitimate funds were used in the purchase or face assets being seized.

Today’s announcement is another example of the government’s aim to clamp down on illegal financial activity by placing greater responsibilities on corporations to detect and prevent such behaviour.

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