Criminal Finances Bill receives Royal Assent to tackle money laundering and corruption

The Criminal Finances Act 2017 will give law enforcement agencies and their partners further capabilities and powers to recover the proceeds of crime, tackle money laundering, tax evasion and corruption and combat the financing of terrorism.

The Act of Parliament creates unexplained wealth orders which can require those suspected of serious crime or corruption to explain the sources of their wealth. In addition, it creates new criminal offences for those corporations who fail to prevent any member of their staff from facilitating tax evasion.

The Act enables the seizure and forfeiture of proceeds of crime and terrorist money stored in bank accounts and certain personal or moveable items, provides legal protections for the sharing of information between regulated companies and extends the time period granted to law enforcement agencies to investigate suspicious transactions.

Also, the Act extends disclosure orders to cover money laundering and terrorist finance investigations while at the same time extending the existing civil recovery regime in the Proceeds of Crime Act to allow for the recovery of the proceeds of gross Human Rights abuses or violations overseas.

James Siswick, partner for risk consulting at KPMG UK, commented: “In a week when UK banks begin to show signs of having their costs under control, another set of compliance requirements comes along which could expose them to unlimited fines and reputational damage. From September, all financial institutions will be ‘on the hook’ for the conduct of their staff. This isn’t just a case of reassessing product offerings and having a firm word with the Tax Department. The Criminal Finances Bill will apply to all business activity. It could be triggered by the erroneous treatment of employees’ expenses or missing VAT on a window cleaning bill. Institutions now face the task of assessing where their risks lie and how to implement reasonable procedures in order to manage them.”

Siswick went on to state: “The challenge isn’t limited to the UK. Global institutions with a UK presence could be subject to UK criminal proceedings if an employee anywhere in the world is found guilty of facilitating tax evasion. The additional risk and compliance challenges this poses are significant. They come at a time when Brexit is already causing uncertainty for some businesses.”

In conclusion, Siswick observed: “While few firms will be jumping for joy at the prospect of more compliance, the price of ‘getting it wrong’ will help make the UK a leader in compliance and should also act as a driver for good corporate culture. Making the whole firm responsible for the actions of individuals will force companies to think very carefully about the type of people they employ. It may also lead to a spike in whistleblowing.”

 

About the Author
Brian Sims BA (Hons) Hon FSyI Editor, Risk UK Pro-Activ Publications

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