UK Investigations And Financial Crime: Horizon Scanning

• Jurisdiction: United States,Federal
• Author: Andrew Reeves, David Harris, Stuart Neely, Annie Birch and Claudia Van Gruisen
• Law Firm: Norton Rose Fulbright
• Published date: 04 July 2023

As anticipated in our previous blog post on predictions for 2023, this year has brought about significant developments in investigations and a real focus on fraud. Looking ahead to the second half of 2023, we predict that developments affecting UK business or those doing business in the UK will include:

1. continued reform of corporate criminal liability, including greater clarity on the new failure to prevent fraud offence and the implementation of the government's new fraud strategy;
2. increased litigation involving sanctioned Russian individuals and entities;
3. an increased focus from the FCA and PRA on cooperation by firms and individuals subject to investigations;
4. the introduction of an anti-greenwashing rule by the FCA as part of the broader regulatory focus on greenwashing, which is also an enforcement priority for the CMA and ASA; and
5. further UK and EU legislative changes requiring companies to conduct due diligence and report on ESG risks, both in relation to human rights and the environment.

Fraud

Economic Crime and Corporate Transparency Bill

The Bill contains significant developments including: (i) an expansion of the role and powers of Companies House and (ii) a new failure to prevent fraud offence.

• Companies House as a regulator: The Bill includes significant reforms to the role of Companies House, giving Companies House improved investigation and enforcement powers. In particular, there is a focus on identity verification measures for new and existing companies, directors and persons with significant control and there will be enhanced information sharing powers between Companies House and other law enforcement agencies with a view to assisting money laundering and financial crime investigations.
• Failure to prevent fraud: Under the proposed offence for failure to prevent fraud, an organisation will be liable if it fails to prevent an associated person from committing a specified fraud offence, and the fraud is carried out for the benefit (directly or indirectly) of the company (or a person to whom services are provided on behalf of the company). Organisations will have a defence if they can prove that 'reasonable procedures' were in place at the relevant time, which were designed to prevent associated persons from committing an offence The offence is likely to come into force in 2024. See our articles here and here and listen to our webinar here for more details on the proposed offence, the costs of implementation and what organisations should be doing now to prepare.
• Reform to the identification doctrine: On 15 June, a proposal was submitted for the Economic Crime and Corporate Transparency Bill to bring "senior managers" within the scope of who can be considered as the "directing mind and will" of a business. The extent of the impact of this will depend on how widely the term "senior managers" is interpreted in practice, but the reform is likely to make it easier to prosecute...