Financial services

Criminal Finances Bill: what you need to know

Steven Newman Steven Newman

The new Criminal Finances Bill – due to become law this year – is designed to help in tackling corruption, money laundering and tax evasion. Here's what you need to know.

New offence for commercial organisations

A new offence for a commercial organisation who fail to stop their staff promoting tax evasion may have similarities to the offence committed by a commercial organisation that fail to prevent bribery.

As the new corporate offences cannot be committed by individuals, the commercial organisation would be guilty of the failure to prevent the offence, unless they can show that they had reasonable prevention procedures in place (or that it was not reasonable to expect such procedures).

Suspicious transactions

The bill proposes to increase the current 31 day moratorium limit on suspicious financial transactions by an additional 186 days, giving financial institutions difficulty in not committing the criminal offence of tipping off clients.

The Home Office has said that this will allow the government to recoup more criminal assets by reforming the law on proceeds of crime (POCA), including provisions to strengthen enforcement powers and protect the public.

It will also implement a more effective regime to support reporting of suspicious financial activity, make it easier to seize funds obtained by criminal means and improve data sharing between the public and private sectors to tackle criminal financial behaviour.

The bill would create unexplained wealth orders (UWOs) that require a person who is suspected of involvement in, or association with, serious criminality to explain the origin of assets that appear to be disproportionate to their known income. A failure to provide a response would give rise to a presumption that the property was recoverable.

The bill would also allow for this power to be applied to foreign politicians, or officials or those associated to them to tackle money laundering and tax evasion by overseas persons through the UK ie politically exposed persons (PEPs).

The National Crime Agency (NCA) will have further powers to direct a suspicious activity report (SARs) reporter or other regulated entity to provide additional information. Some information is exempt, such as legally privileged.

The bill would create a legal gateway for sharing information between entities within the regulated sector (eg banks), encouraging better use of public and private sector resources to combat money laundering.

The bill would allow for regulated bodies to share information with each other,where they have notified the NCA that they suspect activity is related to money laundering. This measure will enable the submission of ‘super SARs’.

The bill would create new civil powers to enable the forfeiture of monies stored in bank accounts and items of personal property.

In short the bill will:

  • make corporations made accountable if their staff members have been found to be complicit in facilitating tax evasion
  • improve the SARs processes to assist the NCA in progressing reports of suspicious financial activity reported by institutions
  • make it easier for law enforcement and courts to seize criminal proceeds
  • increase the current 31 day moratorium limit on suspicious financial transactions by an additional 186 days (217 days).

For more information about the Criminal Finances Bill and how it may affect your business, contact Steven Newman (steven.p.newman@uk.gt.com) or the Financial crime and investigations team.