The news that - finally - the government plans to introduce new failure to prevent (“FTP”) offences in the economic crime sphere has been well received by those who hope it will ensure corporates are more readily held to account. The exact scope and shape of those offences is as yet unclear but is likely to include corporate offences of failing to prevent fraud, false accounting and money laundering. Even more unclear is the extent to which such offences are actually effective in corporates being brought to justice.
The new FTP offences will be introduced into law through the Economic Crime and Corporate Transparency Bill which is currently making its way through Parliament. The FTP offences were not included in the version of the Bill tabled at the first reading but statements from government during the latest reading suggest they will find their way into the legislation at the latter stages.
FTP offences were introduced in the UK in the economic crime sphere through The Bribery Act in 2010 and followed by FTP the facilitation of tax evasion brought in by the Criminal Finances Act 2017. There was much fanfare at the idea that these FTP offences would make it significantly easier for prosecutors to hold corporates to account. However the proof has been in the pudding. And the pudding does not have much substance. There has not been a single prosecution in relation to the FTP the facilitation of tax evasion. HMRC have confirmed that as at 1 January 2023, there are nine live investigations ongoing into the corporate offence. At some point, there will inevitably be a prosecution; but it is slow progress in five years even if 2023 is the year for it.
The picture with regards FTP bribery is slightly more encouraging from the Prosecutor’s point of view; there have been nine Deferred Prosecution Agreements which have included the corporate offence of FTP bribery and three corporate convictions.
Whilst FTP offences may not have had the desired result of holding corporates to account for their wrongdoing, they do seem to focus the mind of corporates and financial institutions and result in new policies and procedures being produced and implemented. Perhaps this is the best we can hope for with the introduction of these new FTP fraud, false accounting and money laundering offences – that more organisations will put in place measures to reduce these forms of economic crime. Perhaps that is all the government is hoping for?