Government concede on FTP.. maybe

A new version of the Economic Crime and Corporate Transparency Bill, published at the end of the Lords Report stage, contains some good news for those who opposed the narrow scoping of the proposed “failure to prevent fraud” offence.  The version to be read at third reading in the Lords on 4 July now includes several new or amended provisions – although some of the drafting appears confused, in places duplicative, and not necessarily reflective of the Lords’ debate which took place on 27 June:

• a widened “failure to prevent fraud” offence, under which:
  • a “relevant” body for the purposes of the offence is now simply any body corporate or partnership (with no size criteria);
  • the offence will apply where any associated person commits a fraud offence intending to benefit the relevant body or any person to whom it provides services on its behalf;
  • a “fraud offence” is defined by reference to common law and statutory offences of fraud, false accounting and participating in fraudulent business, or aiding or abetting any of them;
  • there is an additional offence where an employee of a relevant body commits fraud intending to benefit the relevant body, and that body is at the time a subsidiary of a large organisation;
  • it will be a defence to have in place, or prove it was reasonable not to have in place, prevention procedures;
• a new “failure to prevent fraud and money laundering” offence, which will apply to all bodies corporate and partnerships incorporated in or doing business in the UK, and will apply where any person associated with it commits a fraud or money laundering offence intending to benefit the relevant body or any person to whom it provides services on the relevant body’s behalf:
  • the definition of “fraud and money laundering offence” appears to be the same as that of a fraud offence;
  • it will not matter where the relevant conduct took place;
  • it will be a defence to have in place, or prove it was reasonable not to have in place, prevention procedures;
• a new provision stating that if a senior manager of a body corporate or partnership is acting within the actual or apparent scope of their authority and commits one of a number of listed economic crime offences (including fraud, money laundering, and terrorist financing offences, offences under SAMLA and the MLRs, misleading statements and certain breaches of FSMA that are criminal offences), the organisation will be guilty of the offence;
• provisions creating a defence for certain predicate money laundering offences for businesses in the regulated sector where monies are handed over to a client, where they do not relate to defined excluded business, fall beneath a new threshold of £1000;
• provisions allowing firms in the regulated sector to deal with funds where some, but not all, of an account it under suspicion;
• makes changes to information order requests; and
• clarifies restrictions on civil liability where certain disclosures are made.