Criminal Investigations in the UK: What to Watch for the UK and the EU in 2023

Developments to the UK criminal liability regime for corporates are expected to hit the statute books in 2023, with the introduction of new “failure to prevent” offences. As we saw with the introduction of the “failure to prevent bribery” offence under section 7 of the Bribery Act 2010, any such expansion of the “failure to prevent” regime will likely have far-reaching, and potentially seismic, consequences.

Reform to the UK corporate liability regime has been long discussed and promised, with prosecutors arguing that the current law – requiring them to prove that those individuals with the necessary “directing mind and will” of the company performed the necessary criminal act and had the necessary state of mind (known as the “identification principle”) – makes it exceptionally difficult to prosecute large global organizations for criminal offences. It is argued that it is hard to link companies with a diffuse structure to the offence of a controlling officer. The identification principle has been pointed to as the reason for the acquittals in a number of recent high-profile criminal cases.

Whilst a reform of corporate criminal law in the UK has been on the backburner for over 15 years, in June 2022 the Law Commission finally published an options paper on corporate liability. At least four different Parliamentary select committees have also, in 2022 alone, urged the government to introduce corporate criminal law reform. The Law Commission found that the current law poses “an obstacle to holding large companies criminally responsible for offences committed in their interests by their employees” and incentivizes poor corporate governance, by “reward[ing] companies whose boards do not pay close attention” and penalizing those that do. The Law Commission set out several options for reform, which is awaiting a response from the government.

Against the background of the UK Parliament’s renewed interest in reform including proposed amendments to the Economic Crime and Corporate Transparency Bill currently going through Parliament (which, if passed will dramatically increase the chances of a successful prosecution of large companies and their senior executives for financial crime), it is hard to see how the government in 2023 can resist some form of meaningful legislative response. We predict both reform of the identification doctrine (to broaden it to cover crimes committed with the consent or connivance of senior managers, and to cover collective negligence) and the introduction of specific failure to prevent offences (particularly in relation to fraud, but maybe also in relation to failure to prevent money laundering). As with the introduction of the Bribery Act over a decade ago, this is now the opportunity for companies to review their existing compliance systems and prepare themselves for the likely changes on the horizon prior to any formal legislation being passed.


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