Following the enactment of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) last month, the UK Government has proposed in the Criminal Justice Bill (CJB) (here) to extend the scope of corporate liability for senior managers beyond certain economic offences to all UK criminal offences.
Reform of economic crime laws was originally proposed by the Government in its Economic Crime Plan 2 and Fraud Strategy. The ECCTA subsequently introduced significant changes with the introduction of a failure to prevent fraud offence as well as changes to corporate criminal liability (see our recent articles here and here). During the debates on the ECCTA, the Government noted that the consequences of extending corporate liability to all offences committed by senior managers were being considered fully before such a wide test could be introduced.
The test for corporate criminal liability in the ECCTA (due to come into force on 26 December) means that if a senior manager of a body corporate or partnership commits certain economic criminal offences (including bribery, fraud and money laundering) while acting within the actual or apparent scope of their authority, the body corporate or partnership will also be criminally liable. Where the senior manager’s conduct took place wholly outside the UK, the body corporate or partnership will not be liable unless it would itself have been guilty had it carried out the acts that constituted the offence in the location they took place. This is intended to prevent criminal liability attaching to an organisation for conduct carried out wholly outside the UK, simply because the senior manager concerned is subject to UK extraterritorial jurisdiction: for instance, because that manager is a British citizen.
The CJB had its first reading in the House of Commons on 14 November 2023, starting its legislative journey. Among a wide variety of proposed amendments to UK criminal law and procedure, the Government proposes to widen the ECCTA’s test for corporate criminal liability for the acts of senior managers. The changes proposed in the CJB will mean that if a senior manager of a body corporate or partnership commits any UK criminal offence while acting within the actual or apparent scope of their authority, the body corporate or partnership will also be criminally liable. As with the ECCTA, organisations based and operating outside of the UK will not to be liable for conduct carried out wholly outside the UK.
Extending corporate criminal liability to all offences committed by their senior managers may raise complex issues relating to the scope of senior managers’ duties. It is reasonably clear that an economic offence, e.g. fraud or tax evasion committed by a chief financial officer is within the scope of their duties but it remains to be seen whether the whole ambit of more general offences (such sexual offences, harassment and crimes against the person) committed by a senior manager while at work could result in corporate prosecution if there was a widespread systemic issue.
There is no scheduled next step for the CJB but these proposed changes may suggest that the coming into force of the ECCTA (including the necessary guidance for the new failure to prevent fraud offence) will take longer than originally expected as the Government adds to and amends its legislation for tackling fraud.