The Crime and Policing Bill has recently been introduced to the House of Commons in the UK. Amongst other changes, it seeks to expand the provisions brought by The Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) regarding the scope of corporate criminal liability. If enacted as currently drafted, it will significantly expand the range of conduct for which a company may be held liable, extending this beyond economic crimes to all crimes.
Identification Principle
Prior to the reforms brought by ECCTA, businesses would only be criminally liable where the commission of the offence can be attributed to a person, who at the material time had “directing mind and will” with the authority to make such decisions on behalf of the company (typically top-level executives) – known as the “identification principle”.
Current position under ECCTA
ECCTA has reformed the identification principle by replacing the traditional directing mind and will test with a new statutory “senior manager” test. Section 196 of ECCTA which came into force in December 2023 , states that if a senior manager of a body corporate or partnership, acting within the actual or apparent scope of their authority, commits or attempts to commit a “relevant offence” the organisation is also guilty of the offence.
A “senior manager” is defined as a person who plays a significant role in either:
- Making decisions about the company’s activities. The decisions must be related to a substantial part of the company’s business.
- Managing or organising those activities in relation to a substantial part of the business.
This change has lowered the level of liability, allowing prosecutors to focus on the role and responsibilities of an individual, rather than trying to establish whether they are the directing mind and will of the company.
The “relevant offences” are listed in Schedule 12 of ECCTA and currently includes various economic crimes, such as fraud-related offences, violations of the Financial Services and Markets Act 2000 and more.
The Crime and Policing Bill
The Crime and Policing Bill (the “Bill”) has recently had its second reading in the House of Commons and is expected to enter the Committee Stage on 27 March 2025 .
Section 130 of the Bill proposes to broaden the scope of corporate criminal liability by expanding the changes introduced by Section 196 of ECCTA to all crimes including general crime and regulatory offences, not just those listed in Schedule 12 of ECCTA.
How can we help?
Whilst the Bill is in the early stages of review, if made law this will have significant implications for your business. It is important that your business is proactive and takes steps to mitigate the risks of corporate criminal liability. Now is the time to strengthen your internal controls and compliance policies, particularly for senior managers by implementing enhanced governance, clear ethical guidelines and regular training for senior managers.
Our specialist Business Crime & Investigation team can assist you in preparing for these changes and minimise the risk of non-compliance.
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