Key Facts

• New clause 69 would prevent repeated business failures due to fraudulent activities.
• Robert Skillen's company HELMS was wound up and he faced minimal penalties despite significant fraud.
• The Information Commissioner’s Office lobbied for the power to fine individuals like Skillen up to £500,000.
• New Clause 70 seeks to bar directors in breach of duties from receiving government funds unless such funds are specifically for employees.
• The clause aims to prevent misuse of public funds by companies with directors who have violated statutory duties or employment law.
• New clause 70 targets directors who fail to comply with the Companies Act or employment law.
• Government loan funding was granted to Mr Skillen's new companies despite his previous failures.
• The clause would not impact workers' access to furlough scheme benefits.
• The current SARs regime is described as 'broken' due to its inability to handle the volume of suspicious activity reports effectively.
• In 2017, a reform programme for SARs was announced by the Government but has not been completed despite an original promise of delivery by December 2020.
• New clause 71 aims to introduce a risk rating system to prioritize and improve analysis of SARs.
• The number of SARs reported in 2022 is expected to reach three quarters of a million, up from 20,000 twenty years ago.
• There are only 118 people handling SARs in the UK, compared to an Australian ratio of one employee per 1,400 SARs.
• The Proceeds of Crime Act 2002 needs amendment.
• Nigel Kirby from Lloyds Bank suggested that the SAR regime and the Proceeds of Crime Act need wholesale reform.
• In 2019-20, nearly 600,000 SARs were received and processed by the UKFIU.
• New Clause 73 aims to hold relevant commercial organisations accountable for fraud, false accounting, or money laundering committed by associated persons.
• It proposes that companies can be exempt from liability if they prove the conduct was intended to harm them.
• The clause includes a defence for companies that have reasonable procedures in place to prevent such activities.
• The 2015 Conservative manifesto committed to making it illegal for companies to fail to put in place measures to prevent economic crime.
• A 2017 Ministry of Justice consultation on corporate liability reform found insufficient evidence despite 76% of respondents saying the identification doctrine inhibits holding companies accountable for economic crime.
• The Law Commission’s review in 2022 found the current situation highly unsatisfactory and unfair, recommending reforms to prevent large companies from escaping prosecution.
• Barclays was acquitted in a bribery case due to the identification doctrine, which prevents senior officers from being held responsible for corporate actions.
• In 2022, four parliamentary Committees called for reform of corporate criminal liability legislation.
• New clauses would introduce a new offence of failing to prevent fraud, false accounting or money laundering.
• Fraud accounts for 40% of all recorded crimes in the UK but prosecutions have fallen by 67% over the last decade from 42,000 in 2011 to 13,500 in 2021.
• The new clauses would extend current failure to prevent offences beyond bribery and tax evasion to other economic crimes such as money laundering and fraud.
• The Economic Crime Committee of Parliament (ECC) would consist of nine members drawn from both the House of Commons and the House of Lords.
• Each member of the ECC is to be appointed by their respective House of Parliament.
• The ECC will have the power to meet confidentially and examine regulatory, enforcement or supervision agencies involved in economic crime.
• Proposed Economic Crime Committee (ECC) would mirror the Intelligence and Security Committee.
• ECC would be a joint committee of both Houses of Parliament.
• ECC could meet confidentially but ideally should operate publicly.
• The ECC aims to improve accountability and effectiveness of agencies dealing with economic crime.
• New Clause 76 aims to define whistleblowing in relation to economic crime.
• An Office for Whistleblowers must be set up within twelve months of the Act receiving Royal Assent.
• The Office is tasked with protecting whistleblowers, investigating disclosures, and escalating information as needed.
• The new clause is supported by cross-party consensus.
• The Panama papers leak exposed corrupt practices involving 12 current and former world leaders, restoring £1.2 billion of tax revenue to national Governments.
• In the UK, the Goldman Sachs sweetheart deal was revealed through a whistleblower from HMRC.
• Only 4% of whistleblowers who bring claims under the current legal structure succeed.
• Of the 1,041 whistleblower reports submitted to the FCA in 2021-22, only three have resulted in significant action.
• 43% of economic crime is identified by whistleblowers.
• Ian Foxley's case highlights the need for better whistleblower protection.
• There are currently 80 prescribed persons, which will be extended with a statutory instrument this week.
• Members of Parliament and some agencies are designated as prescribed persons.
• The new clause addresses the failure to prevent corporate offences by establishing liability for senior managers.
• Clause 80 allows the Director of Public Prosecutions or other directors to serve notices to holders of bank accounts suspected of holding recoverable property obtained through economic crime.
• Clause 81 provides a summary procedure if the respondent fails to attend the hearing required by clause 80.
• New Clause 84 would establish a fund for compensating victims of economic crime.
• The Secretary of State must publish a strategy for this fund within 90 days of the Act coming into force.
• The clause aims to help UK victims of online scams and fraud, as well as international victims such as those affected by the war in Ukraine.
• The Bill already focuses on victim compensation through existing powers and commitments by various law enforcement bodies.
• Meetings have been held regarding international forums such as the Russian Elites, Proxies, and Oligarchs Taskforce and the European Commission’s Freeze and Seize Taskforce.
• Work is being done closely with common law jurisdictions like Australia, Canada, and the United States to address legal challenges in asset seizure.
• Cryptoassets are defined as cryptographically secured digital representations of value or contractual rights using distributed ledger technology.
• A crypto wallet is software, hardware, a physical item, or any combination thereof used to store cryptographic private keys.
• Terrorist cryptoassets are those within subsection (1)(a) or (b) of section 1 or earmarked as terrorist property.
• Authorized officers can seize and detain items for up to 48 hours initially.
• Detention periods can be extended by a magistrates' court in England, Wales, or Northern Ireland, or by the sheriff in Scotland.
• The speaker expresses concern about part 4BB of the Economic Crime and Corporate Transparency Bill.
• There are worries that certain aspects of the bill may have unintended negative consequences for organisations.
• 'Cryptoasset exchange provider' includes firms that exchange or arrange exchanges of cryptoassets for money.
• 'Custodian wallet provider' safeguards or administers cryptoassets on behalf of customers.
• The Secretary of State may amend definitions through statutory instruments approved by Parliament.
• Part 4BC of the Economic Crime and Corporate Transparency Bill is under discussion.
• The MP highlights the importance of corporate transparency measures to combat economic crime.
• The statement includes definitions for 'cryptoasset service provider' and 'senior officer'.
• It outlines the process for applying to a court for the forfeiture of cryptoassets.
• Details on compensation provisions are provided for individuals affected by crypto wallet freezing orders or detentions.
• The bill aims to tackle economic crime.
• There are concerns it may have a disproportionate effect on small businesses.
• Amendments are made to the Anti-terrorism, Crime and Security Act 2001 and the Terrorism Act 2000.
• The legislation covers conversion of cryptoassets into money for detention purposes.
• Definitions for 'cryptoasset' and related services providers are introduced.
• The ECCTB was brought up, read for the first and second time.
• The bill was amended and reported.
• Committee members discussed submissions from Dr Samantha Bourton, The Payments Association, Michael Barron Consulting Limited, Engaged Consulting Limited.