The Criminal Finances Bill 2017

On 27 April 2017, the much anticipated Criminal Finances Bill became law after it received Royal Assent. The Bill was somewhat rushed through the parliamentary stages given the unanticipated general election. The Criminal Finances Act 2017 contains many important changes to the white collar crime arena and it has now been announced that they will come into force on 30th September 2017. There will be greater powers for law enforcement agencies to tackle tax evasion, money laundering, corruption and terrorist financing.

Unexplained Wealth Orders

Unexplained Wealth Orders have been designed to tackle the current problems within the UK's asset recovery regime, namely that the UK focusses on achieving a conviction in relation to the financial crime before the defendant's assets are seized which allows the money to be laundered in the meantime. Transparency International's 2016 Report 'Empowering the UK to Recover Corrupt Assets' states that an estimated lb23-lb57 billion is laundered through the UK annually as a result of grand-corruption, which usually involves Politically Exposed Persons removing corrupt wealth from their home countries and investing it in the UK.

It is currently very difficult to restrain suspicious transactions in the UK, unless the individual has a previous conviction. This means that large quantities of unexplained suspicious wealth enter the UK each year before being invested in the economy.

Under the new Act, enforcement agencies can act pre-conviction and apply to the High Court to freeze suspect property belonging to PEPs or those involved in serious crime. The owner will have to show where the money came from or risk forfeiture. The property specified must be worth at least lb50,000 and in order to grant the order, the court must be satisfied that there are reasonable grounds for suspecting that the individual's lawfully obtained income would not have been sufficient to enable them to obtain the suspect property. Knowingly or recklessly making a false statement in response to a UWO will carry a maximum of a 2 year prison sentence. UWOs could mean that people face having their assets frozen without notice and will be forced to disclose details of their private financial affairs.

Corporate failure to prevent tax evasion

A new criminal offence of 'Failure to prevent facilitation of tax evasion' (both domestic and foreign) is introduced by The Criminal Finances Act. It is directed at companies who must now account for the actions of their employees and agents if they are responsible for facilitating tax evasion or assisting their customers in evading tax. An individual cannot be guilty of this offence, only a company or partnership.

It is difficult in the UK to successfully prosecute large companies due to the principle of "governing mind" and the Act seeks to get around this by introducing strict liability. In order for a firm to avoid being criminally liable, they must show that they had implemented reasonable prevention procedures which identify and mitigate the risk of facilitating tax evasion.

Listed Assets

Under the Proceeds of Crime Act 2002, enforcement agencies have been able to seize and forfeit cash from individuals where there are reasonable grounds for suspecting that the cash is the proceeds of crime or will be used in the proceeds of crime. The problem was that value was being moved around by other means, in different property. The Criminal Finances Act now allows the authorities to seize and forfeit items of valuable property as well as cash, although these items must be worth at least lb1000. The list is exhaustive and currently contains 6 different types of property:

  • Precious metals
  • Precious stones
  • Watches
  • Artistic works
  • Face-value gift vouchers
  • Postage Stamps

This list can be changed by the Secretary of State.

These are just a few areas that the new Act governs but the overall message is that the government is cracking down on financial crime.

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