New Criminal Law Affecting Businesses

The Criminal Finances Act received Royal Assent last week. The Act introduces a number of new measures putting businesses at risk of committing criminal offences and giving the State powers to probe into the finances of individuals. Of particular note to businesses are a new strict liability corporate offence of Failing to Prevent Tax Evasion, changes to the Suspicious Activity Report regime and the creation of Unexplained Wealth Orders.

Failure to Prevent Tax Evasion

The new Act makes it an offence for a 'relevant body' (corporation) to fail to prevent tax evasion. The provision is expected to be strict liability and have extra-territorial effect, so will extend to offences that take place both within and outside the UK. A company will be liable if a person associated with them commits the offence.

Commentators have drawn parallels with the 'failure to prevent' provisions in the Bribery Act, however it is expected that the legislation in the Criminal Finances Act will be wider because there will be no need for the corporate body to have benefited from the tax evasion. The Act is expected to contain a statutory defence of having 'reasonable prevention procedures' in place. Companies will be seeking advice to design and implement these procedures ahead of September 2017 when it is expected the new law will come in to force.

Changes to the Suspicious Activity Reports (SARs) Regime

When a SAR is made there is a 31 day timeframe for the authorities to investigate before consent to a proposed...