This means that now is the time for businesses to get prepared.
Failure to prevent fraud
Under this offence, a business will be criminally liable if an employee or third party acting on its behalf commits external fraud (not fraud against the company itself).
It will be a complete defence for the business to show that it had in place at the time of the offence reasonable preventative procedures, or that it was reasonable not to have any procedures.
The government will issue guidance on what constitutes reasonable procedures, but businesses can get ahead now by assessing their fraud risk and mapping their existing fraud controls to see if there are any gaps.
Extension of corporate liability
The extension of corporate liability will make it easier for law enforcement to prosecute businesses for the economic crimes committed by its senior managers.
This means businesses could face prosecution for money laundering, bribery, tax evasion, sanctions violations and terrorist financing offences committed by senior managers.
Unlike the failure to prevent offences, there is no statutory defence for businesses.
A business will have to rely on its compliance programme to prevent its senior managers from committing economic crimes or using them to mitigate its penalty.
Accordingly, businesses should now be reviewing and refreshing their economic crime compliance programmes to ensure they are fit for this purpose.
Ben Cooper is a partner and head of economic crime compliance at TLT
