Part 1: Top 5 corporate crime enforcement trends for the year ahead
As we commence a new year in the midst of unprecedented global challenges, here is our take on the key financial crime risks and trends you need to be aware of in 2021.Sam Tate, Head of our White Collar Crime and Compliance team, and Kate Langley share their thoughts on five likely areas of corporate crime investigations and enforcement activity.
1. Tackling Covid-19 related fraud will be a new priority: The speed and size of the various government stimulus schemes has created opportunities for fraudsters. It is estimated that up to £3.5bn in Coronavirus Job Retention Scheme payments may have been claimed fraudulently, with HMRC reviewing 27,000 "high risk" cases where abuse or fraud is suspected. In addition, fears have arisen over the distribution of fake vaccines, along with the growing risk of cyber criminality in our virtual world. As new risk typologies emerge, organisations will need to be ready to investigate and respond accordingly, taking a risk-based approach.
2. Economic circumstances will present new challenges: As witnessed in the aftermath of the previous global economic crisis, financial pressures on individuals could result in civil unrest, along with an increase in fraudulent activities, such as by employees at risk of redundancy. The efficacy of Whistleblowing programmes will be tested, and organisations should ensure that such schemes are fully embedded into their BAU operations.
3. The first "failure to prevent" prosecution?: We await the first test case on the failure to prevent the facilitation of tax evasion (Corporate Criminal Offences), pursuant to the Criminal Finances Act 2017. A recent report indicated that HMRC has at least 13 live Corporate Criminal Offence investigations with a further 18 opportunities under review, spanning 10 business sectors. It appears likely that charging decisions will commence this year and provide businesses with further insight into the types of tax evasion conduct being targeted by prosecutors.
4. Prosecutions of individuals will be a top priority for the prosecutor: While there has been an increase in Deferred Prosecution Agreements (DPAs) with corporate entities over the past couple of years, there have been several acquittals of associated individuals. Lisa Osofsky, Director of the Serious Fraud Office (SFO) notes that the successful prosecution of individuals remains a regulatory priority, with recent SFO guidance expressly seeking company co-operation with the future prosecutions of individuals.
5. Cross-regulator, cross-border and public-private co-operation: Cooperation will continue and, despite Brexit, there will be continued efforts to increase regulatory co-operation. For example, we expect to see more agreements such as the recent Memorandum of Understanding between the Competition Markets Authority and the Serious Fraud Office. Increasing partnership between the public and private sectors will also be key to tacking corporate crime, as envisaged in the UK's Economic Crime Plan 2019-2022.
For more information, or to discuss any of these takeaways further, please do not hesitate to contact the us or visit our corporate crime page to find out how our team can help.