The House of Lords yesterday voted through three key amendments to the Economic Crime and Corporate Transparency Bill (ECCTB) at Report Stage. Spotlight on Corruption has long advocated the measures in these amendments and urges the government to accept them when the Bill returns to the Commons.
These amendments would:
- Remove the exemption for SMEs in the government’s ‘failure to prevent fraud’ offence. Instead, it creates a provision for the Secretary of State to issue specific guidance for SMEs, particularly for micro-enterprises, on what prevention procedures are reasonable for them to have to avoid disproportionate burden on the sector (amendment 110).
- Bring forward the power to create a ‘failure to prevent money laundering’ offence. There is already provision in the government’s current ‘failure to prevent fraud’ offence amendment for this to happen by secondary regulations at a later date, but this amendment would put it in primary rather than secondary legislation (amendment 125A).
- Ensure law enforcement agencies are protected from exorbitant costs when trying to recover the proceeds of crime and corruption (amendment 129).
In addition, Peers voted to accept the government’s own amendment to the Bill which rewrites the underlying rules for how companies can be prosecuted for economic crime – known as the ‘directing mind’ test.
Together these amendments from both the government and Peers represent a major and highly welcome revamp of the UK’s corporate liability regime. They provide new tools for prosecutors to hold business to account on a criminal law basis for economic crime. They should also herald a major culture change in UK business so that they play their role in preventing economic crime through robust procedures.
Laws are only as good as their enforcement however. We strongly urge the government to commit to a full review of whether law enforcement is adequately resourced to implement this new legislation across the board. We also urge the government to look seriously at how more of the assets and fines that law enforcement brings in can be reinvested into those agencies to improve enforcement outcomes which are currently far too infrequent to provide real deterrence.
Next steps?
The Bill will now be considered once again in the Commons, and MPs will have the opportunity to debate – and vote on – these and other amendments passed by the Lords (including those supported by our friends at Transparency International enhancing Companies House related provisions).
We hope MPs from all parties will agree with these Lords amendments and ensure the Bill reaches its full potential. If the government continues to oppose these amendments, we hope it comes forward with its own amendments in lieu which meet Peers’ ambitions.
For more information on these amendments, see the UK Anti-Corruption Coalition’s briefing prepared ahead of the Lords’ Report Stage.
