Practical Law

The international anti-corruption summit took place in London last week.

• The purpose of the summit was to galvanise a global response to tackle corruption and to agree a package of practical steps to:
  • Expose corruption so there is nowhere to hide.
  • Punish the perpetrators and support those affected by corruption.
  • Drive out the culture of corruption wherever it exists.
• Even before the summit began on 12 May, David Cameron announced that he will extend a corporate ‘failure to prevent’ offence to fraud and money laundering, not just bribery and tax evasion.
• The prime minister’s intention to bring forward the corporate liability offence for facilitating tax offences had already been trailed in an announcement and on 18 April, HMRC opened a consultation (closing 10 July 2016) to consider draft legislation.
• Under the draft legislation, the substance of the tax offence remains the same as that originally proposed in December 2015: to criminalise corporate bodies that fail to prevent an associated person from facilitating the fraudulent evasion of tax, either in the UK or overseas.
• The offence uses the “failure to prevent” strict liability model also found in section 7 of the Bribery Act 2010, and related definitions. The associated person who facilitates a tax evasion offence can be legal or natural, and can perform services for or on behalf of the corporate as an employee, agent or subsidiary.
• The current “failure to prevent offence” in the Bribery Act has had limited use since it came into force in 2011, and the government abandoned a proposed “failure to prevent economic crime” offence in 2015, partly for that reason.
• The prime minister also announced that:
  • Foreign companies that already hold or want to buy property in the UK will be forced to reveal who really owns them.
  • Overseas firms will have to sign a new public register if they want to bid for central government contracts.
  • 40 jurisdictions, including a number of Overseas Territories and Crown Dependencies with major financial centres, will automatically share beneficial ownership information between governments (a list has subsequently been published).
  • The UK will host the first ever International Anti-Corruption Coordination Centre in London to strengthen cross-border investigations.
• Neither the US nor the BVI signed up to information sharing (BVI was not even represented at the summit), but six countries (Britain, Afghanistan, Kenya, France, the Netherlands and Nigeria) have agreed not just to share information but to publish registers of beneficial ownership. Six more, including Australia, will consider doing so.