Corporate Criminal Liability – The U.K. Law Commission’s 10 Options

On 10 June 2022, the U.K. Law Commission (LC) published a set of proposals or options in relation to the law on corporate criminal liability in the U.K. The LC is an independent commission created by Parliament, and its primary function is to keep U.K. law under review and to recommend reforms. The options paper does not make recommendations; it simply outlines 10 options which could strengthen corporate liability by both criminal and civil law reforms.

Background

There has been concern especially amongst prosecuting authorities that the current law does not hold large corporations to account, particularly for economic crime such as fraud and money laundering. Therefore, in November 2020, the LC was asked by the government to review the current law on corporate criminal liability, particularly the challenges faced by the criminal justice system under the current law relating to corporate criminal liability. The options paper provides 10 possibilities for reform:

1. To retain the current rule of corporate criminal liability and current identification doctrine as they stand, and therefore to do nothing.
2. Expand or modify the current rule to allow conduct to be attributed to a corporation if a member of its senior management engaged in, consented to or connived in the offence. This would be extended so that Chief Executive Officers and Chief Financial Officers are always considered part of an organisation’s senior management.
3. Introduce an offence of failure to prevent fraud by an associated person, namely an employee or agent to benefit the organisation or a person to whom the organisations provide services, namely a client or customer. This would apply when a company has not put in place appropriate measures to prevent their employees and/or agents from committing fraud for the benefit of the company.
4. Introduce an offence of failure to prevent human rights abuses.
5. Introduce an offence of failure to prevent ill-treatment or neglect.
6. Introduce an offence of failure to prevent computer misuse.
7. Make publicity orders available in all cases where companies are convicted of an offence as a strong deterrent method.
8. Introduce a regime of administratively imposed monetary penalties.
9. Introduce civil actions in the High Court.
10. Introduce a requirement for public interest entities to report on anti-fraud procedures or introduce a requirement similar to Modern Slavery Act statements for larger corporations to report on their anti-fraud procedure.

Next Steps

The government will consider all the options, and reform in the law will come with further guidance.

In the meantime, for further information on the issues raised in this article, please contact our White-Collar Criminal Defense and Government Investigations lawyers.