1. Corpus delicti
The Economic Crime and Corporate Transparency Act of 26 October 2023 envisages, in particular, the establishment of new corpus delicti, i.e. failure of on organisation to prevent fraud, including that involving public funds and public office, and embezzlement.
The provisions of the Act cover organisations and partnerships, including unincorporated ones, registered in the UK, and foreign companies that conduct their activities in the territory of the country.
Liability can be imposed on the organisations that are in line with at least two of the following criteria:
- It has more than 250 employees;
- Its annual turnover exceeds 36 million pounds (roughly 4.1 billion rubles);
- Its balance sheet is of over 18 million pounds (around 2 billion rubles).
An organisation can be found guilty in the event that:
- A person associated with it commits a crime in the interest of the organisation or the person (subsidiaries of the person) to whom the organisation provides services; the “person associated with the organisation” is an employee, an agent, a subsidiary (including the one that does not provide services on behalf of the organisation in contrast to Bribery Act of 8 April 2010) or other person providing certain services to the organisation or providing them on its behalf;
- An employee of the organisation commits a crime with the aim to procure a direct or indirect benefit for the organisation.
If the organisation is found guilty, it can be subject to a fine whose volume will be defined by a court. The Act, however, does not define the maximum fine.
The mitigating circumstances include the proved fact that the organisation has the procedures to prevent fraud in place, or the evidence gathered by the company proving the impossibility to implement relevant procedures in its activities.
The complete exemption of an organisation from liability is foreseen in the event that it is proved that it was itself a victim of the crime.
2. The “identity verification” principle
The Act also changes the “identity verification” principle, i.e. the legal test to solve the issue on whether the intents and actions of a natural person can be considered as intents and actions of a legal person for a number of economic crimes, including:
- Active and passive bribery;
- Bribery of foreign public officials;
- Fraud involving public funds;
- Abuse of functions;
- Conspiracy to commit fraud.
Before the Act was adopted, the actions of officials and employees of organisations could constitute the basis for holding the company liable for the abovementioned crimes only if it was established that the respective person represented the company’s “directing mind and will”.
From now on, under the Act, a company can be held liable for the actions of a wider range of persons, namely its senior managers, i.e. the persons who play a considerable role in:
- Making decisions on all or a significant part of activities of the organisation;
- Actual management of the organisation or a significant part of its activities.
3. Cryptoassets (digital assets)
Additionally, the Act provides law enforcement agencies, in particular, the National Crime Agency (NCA) with the following rights in investigation of crimes, including corruption-related ones:
- Confiscate any property if there are reasonable grounds to believe that it is related to cryptoassets that are proceeds of a crime or acquired with the proceeds of a crime, for instance, it is an external “wallet” for such assets, and use any information gathered in verifying relevant property to identify a crypto wallet and gaining access to it;
- Freeze and/or seize cryptoassets under civil proceedings;
- Convert the confiscated cryptoassets in money following the court decision at the request of a law enforcement officer or the individual from whom these assets were confiscated;
- Destroy cryptoassets if it is not found expedient to dispose of them or there are reasonable grounds to believe that the disposal thereof will contradict public interest.
The provisions of the Act concerning the procedure of confiscation of cryptoassets enter into force upon its adoption; the provisions regarding the changes in the “identity verification” principle come into effect next December; and the provisions on the establishment of new corpus delicti come into force after the legal acts defining the requirements for the implementation of “proper fraud prevention procedures” are drafted and adopted.