The anticipated ‘failure to prevent’ offences are expected to be added to the Economic Crime and Corporate Transparency Bill at House of Lords Committee Stage.
During the debate on the Bill at Second Reading in the House of Lords on 8 February 2023, Lord Sharpe of Epsom confirmed (at column 1316) that the government intends to bring forward amendments to introduce the ‘failure to prevent’ offences at Lords Committee Stage.
In the House of Commons on 25 January (during the Report Stage debate), Tom Tugendhat, Security Minister, had also indicated that the offences would indeed be introduced via amendment to the Bill, saying: ‘the Government intend to address the need for a “failure to prevent” offence in the other place’.
Mark Jones, a partner in the dispute resolution department at law firm Payne Hicks Beach, commented that: ‘Law enforcement have long called for a failure to prevent fraud offence which would make companies liable for the actions of their staff if they fail to demonstrate that they had adequate systems in place to prevent such wrongdoing. At present, companies can only be prosecuted if it can be proven that the company’s “directing mind” intended the commit the offence.
‘The proposal of an offence of failure to prevent fraud, false accounting and money laundering is expected to address the difficulties law enforcement currently have in holding companies to account where fraud and economic crime are concerned,’ Jones said. ‘It will of course lead to companies reviewing/drafting tier policies in relation to the prevention of fraud to ensure their procedures are reasonable and adequate to mitigate the risks.’
The anticipated ‘failure to prevent’ offences are expected to be added to the Economic Crime and Corporate Transparency Bill at House of Lords Committee Stage.
During the debate on the Bill at Second Reading in the House of Lords on 8 February 2023, Lord Sharpe of Epsom confirmed (at column 1316) that the government intends to bring forward amendments to introduce the ‘failure to prevent’ offences at Lords Committee Stage.
In the House of Commons on 25 January (during the Report Stage debate), Tom Tugendhat, Security Minister, had also indicated that the offences would indeed be introduced via amendment to the Bill, saying: ‘the Government intend to address the need for a “failure to prevent” offence in the other place’.
Mark Jones, a partner in the dispute resolution department at law firm Payne Hicks Beach, commented that: ‘Law enforcement have long called for a failure to prevent fraud offence which would make companies liable for the actions of their staff if they fail to demonstrate that they had adequate systems in place to prevent such wrongdoing. At present, companies can only be prosecuted if it can be proven that the company’s “directing mind” intended the commit the offence.
‘The proposal of an offence of failure to prevent fraud, false accounting and money laundering is expected to address the difficulties law enforcement currently have in holding companies to account where fraud and economic crime are concerned,’ Jones said. ‘It will of course lead to companies reviewing/drafting tier policies in relation to the prevention of fraud to ensure their procedures are reasonable and adequate to mitigate the risks.’
