NatWest has pleaded guilty to failures under the UK’s money-laundering regulations – but is it right to call this a ‘failure to prevent’ on its part?

In the wake of the latest leak of documents about the financial affairs of the rich and powerful, are the issues they disclose primarily about financial crime and money laundering, or about something else? BCL partner John Binns discusses the Pandora Papers.

Following an earlier call for evidence in 2017, the Law Commission has been tasked with considering options to reform the law on when and how companies should be held liable for criminal offences. Earlier this year it published a discussion paper and invited responses to 13 questions. BCL partner John Binns continues his four-part response. Read part one of this series here.

The Bribery Act Template

The story so far

The Law Commission devotes surprisingly little of its discussion paper to what most would expect to be the government’s next step – one or more new ‘failure to prevent’ offences, based on the template created in the Bribery Act 2010, and followed in the Criminal Finances Act 2017 (the CFA). The offence of paying a bribe, often committed in order to win a contract or other advantage for the benefit of a business, was and is well suited to this model, whereby the organization becomes liable for the act of an ‘associated person’, unless it can show it had ‘adequate procedures’ to prevent that happening. The main effect of its creation has not been in convictions but in Deferred Prosecution Agreements (DPAs) under the Crime and Courts Act 2013 between the Serious Fraud Office (SFO) and companies, invariably not accompanied by convictions of ‘associated persons’. The offences of facilitating tax evasion (domestic or foreign) are perhaps less well suited to this model, and we have not yet had time to see whether and how companies will be held liable for the acts of ‘associated persons’ under the CFA, or how they might use the defence (subtly different from that in the Bribery Act) that they had ‘reasonable procedures’, or that it was reasonable for them not to have any. When considering further such offences, there are several points to bear in mind.