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Failure to Prevent

Written by Jameela Raymond on Friday, 4 November 2016

The UK Government made 21 commitments at the London Anti-Corruption Summit in May and Transparency International UK has been working to track the progress of these promises. With the Government’s own deadline to consult on making failure to prevent money laundering having now passed, Jameela Raymond explains why it’s not a promise that can afford to be broken.

If you blinked you might have missed it. In May, David Cameron announced a consultation ‘on extending the criminal offence of “failure to prevent” to other economic crimes such as fraud and money laundering so that firms are properly held to account for criminal activity that takes place within them’. The following day, at the London Anti-Corruption Summit, the Ministry for Justice confirmed the plans, and stated that the consultation would take place over the coming summer.

Summer came and went, with not even a peep of the Government’s plans to launch the consultation. In September the attorney general, Jeremy Wright, raised the issue again by confirming that the Government was committed to the cause, and plans to consult were still being made.

The Criminal Finances Bill, introduced into the House of Commons on 13 October, made it a criminal offence for those who fail to prevent their staff from facilitating tax evasion, but still there is no sign of the consultation on failing to prevent money laundering, fraud or any other new economic crime. On 2 November, when asked a parliamentary question about when the consultation would be launched, the answer from the Government – ‘there will be an update on the announced initiative in due course’ – was frustratingly, and disappointingly, vague.

So the question remains: where is the consultation on criminalising the failure to prevent money laundering, fraud and false accounting?  Its importance is clearly understood and eloquently articulated by government officials but despite the apparent political will under both Prime Ministers Cameron and May, this has failed to translate into any action. We have marked the commitment as ‘overdue’ on our UK Anti-Corruption Pledge Tracker, which is monitoring progress on commitments made by the UK at the Anti-Corruption Summit earlier this year.

An extension of the scope of the criminal offence of ‘failure to prevent’ to economic crimes such as money laundering or fraud could see company bosses prosecuted for failing to stop their staff from facilitating these crimes. Forcing company bosses and boards to take responsibility for the actions of their employees could significantly alter the corporate culture which too often fosters an enabling environment which allows corruption to persist.

If included in legislation the criminalisation of failing to prevent economic crimes, such as money laundering, would increase the threat of conviction and, as Jeremy Wright noted, might make companies more likely to proactively discourage such offences within the organisation in the first place. And if our gatekeeping institutions are increasingly galvanised to combat money laundering, corrupt elites around the world will have fewer opportunities and avenues for hiding their ill-gotten gains.  Money meant for schools and hospitals overseas would not end up in UK property or in anonymous companies registered in one of our Overseas Territories or Crown Dependencies. Companies can and must play a critical role in reducing the UK’s role as a safe haven for corrupt assets.

The Government has had some significant anti-corruption wins this year, and we must credit them for their successes. But at the same time, they are undermining their good work by not taking this commitment – a commitment that they willingly proposed, and confirmed, themselves – seriously enough. The statements of intent are no longer enough. Concrete answers and timelines are needed if we are to believe that the Government is not attempting to backtrack on this promise.



Read 830 times Last modified on Friday, 04 November 2016 12:45

Jameela Raymond

Jameela is Transparency International UK's Senior Policy Officer. You can follow her on Twitter @jameelaraymond

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