Financial crime compliance

With Shoosmiths corporate compliance programme, you can reduce the risk of criminal and regulatory breach and help avoid the resulting harm.  It is quick and easy to subscribe, with a fixed fee that’s payable either annually or monthly.

Despite the obvious benefits of a corporate compliance programme reducing both corporate and personal risk, we continue to see large numbers of businesses operating on the mistaken assumption that their policies and procedures provide adequate compliance protection.

We have entered a new era in corporate criminal liability.

The principal prosecutors in the UK have made it extremely clear that effective corporate governance through genuinely proactive and effective corporate compliance programmes will be considered when determining whether they will prosecute or take other regulatory enforcement decisions against organisations where they transgress the criminal law.

Current UK legislation concerning bribery, tax evasion, sanctions, and money laundering shifts the burden onto businesses to ensure they conduct their business ethically and with a degree of transparency. 

Companies, charities, and local authorities are all capable of committing criminal offences ranging from regulatory breaches through to manslaughter, fraud and corruption. These organisations are also capable of being accessories to offences committed by human individuals.

The sting in the tail is where an organisation is alleged to have committed an offence it will invariably give rise to the risk that someone within that organisation or connected to it (whether director, manager, employee, or associated person) has also committed an offence.


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What is a compliance programme?

There are many ways to describe a compliance programme, but perhaps the way to look at it is through the eyes of law enforcement. The detrimental consequences for companies investigated by law enforcement including the FCA, HMRC, and the SFO include:

  • Corporate and personal criminal liability - directors, senior managers, employees, and associated persons are all at risk
  • Imprisonment in certain instances up to a maximum of 10 years - in addition, there is the potential for proceeds of crime proceedings where the court seeks to deprive a defendant of any financial benefit obtained from his or her criminal conduct
  • External sanction costs and other regulatory fines
  • Prosecution costs
  • Direct financial loss through fraud
  • Reputational damage
  • Loss of contracts and debarment from the public tender process
  • Workforce impact - low morale within the workforce, the cost of replacing staff who leave, and disciplinary costs (including the investigation).

The Serious Fraud Office (SFO) defines a programme as:

“

An organisations internal systems and procedures for helping that organisation – and those working there comply with legal requirements [together with its] internal policies and procedures.

Serious Fraud Office

Why do you need a compliance programme?

We can see that as well as being important in the prevention and fight against fraud and other regulatory breaches, a robust compliance culture also provides organisations with strong mitigation against prosecution if the programme is effective, not simply a paper exercise.

The SFO guidance goes further and states that it is critical that the “compliance programme is proportionate, risk based and regularly reviewed”.


Good corporate governance

No business is immune. UK law enforcement expects organisations of any size to have at least some compliance arrangements appropriate to them. Fundamentally it is expected that a compliance programme is more than just a 'paper exercise'.

Certain legislation, the Bribery Act 2010 and Criminal Finances Act 2017, puts the onus on all UK businesses to make sure they take the necessary steps to prevent such conduct from happening and if it does the organisation is at risk of prosecution.

These obligations exist regardless of the business type or sector in which the organisation operates.

Prevention of prosecution

Guidance on corporate prosecutions issued by the Director of Public Prosecutions and the Director of the Serious Fraud Office (SFO) explicitly states that it’s a public interest factor in favour of prosecution where an offence is committed if the organisation has an ineffective compliance programme.

If a genuinely proactive and effective corporate compliance programme is in place then it is a public interest factor against prosecution.

Compliance programmes & FCA regulation

Organisations regulated by the Financial Conduct Authority (FCA) are subject to a myriad of complex and technical rules. Those rules require these organisations to implement effective systems and controls to help detect, prevent and deter financial crime.

These rules are in addition to the other financial crime obligations imposed on all organisations whether FCA regulated or not.

FCA regulation is generally technical and complex. The FCA requires regulated businesses to “…satisfy us [the FCA] that they have robust governance, effective risk procedures and adequate internal control mechanisms to manage their financial crime risk”.

A regulated firm must establish, implement, and maintain adequate policies and procedures sufficient to ensure compliance of the firm including its managers, employees, and appointed representatives (or where applicable, tied agents) with its obligations under the regulatory system and for countering the risk that the firm might be used to further financial crime.

Failure to comply with a firm’s obligations to the FCA will result in criminal and/or civil proceedings against the firm and its senior management, restrictions on a firm’s FCA permissions, and (undoubtedly) loss of reputation.

FCA Financial Conduct Authority logo[No text in field]

How can Shoosmiths help you?

We believe in an holistic approach to compliance and our online suite of financial crime compliance services provide everything you and your business needs to understand the interaction between the various areas of law that your compliance programme should address along with the tools to implement your programme.

Shoosmiths can help you implement a robust financial crime compliance programme. We are able to help you build a compliance programme from scratch through to enhancing an existing programme, whether it be through the design and delivery of policies, risk assessments, training, or monitoring.

Our online suite of compliance services cover the following:

  • Criminal Finances Act – the corporate criminal offence and reasonable prevention procedures
  • Bribery Act – the corporate criminal offence and adequate procedures
  • Anti-money laundering
  • Sanctions & export control
  • Modern slavery
  • Crisis management.

The good news is that it is never too late to strengthen an organisations compliance programme and as long as the organisation has taken remedial actions following an incident of wrongdoing and the compliance programme is genuine and proactive then the prosecutor will treat this as a relevant factor in any charging decision. 


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