Criminal Finances Bill 2017 passes through Parliament

The announcement of the snap election on 8 June 2017 resulted in the Criminal Finances Bill being accelerated through Parliament. With the House of Commons having agreed a number of amendments proposed by the House of Lords, the Bill has now been passed through Parliament and has received royal assent, becoming the Criminal Finances Act 2017.

The Act will provide authorities with a number of new powers to deal with the proceeds of crime, but for businesses, the main impact of the Act will be the introduction of a new corporate offence of failure to prevent the facilitation of tax evasion.

What has happened?

There had been speculation since the Prime Minister called the election as to whether key legislation, including the Criminal Finance Bill, would be rushed through in the “wash up” session before Parliament is dissolved, on 3 May 2017.

On 26 April 2017, the Bill passed its final stage in the Parliamentary process, as the House of Commons considered the amendments that were introduced in the House of Lords the day before.  The Bill then received royal assent on 27 April 2017, becoming the Criminal Finances Act 2017.

Although the Lords had made some 147 amendments, the amendments were largely technical or minor in nature. The most important were clarifications of the type of property that can be covered by new “Unexplained Wealth Orders” or seizure powers under the Proceeds of Crime Act 2002.  There were also some amendments to the changes being made to the suspicious activity report regime, which increases information sharing and provides the National Crime Agency more time and powers to investigate alleged suspicious activity. For more on these new powers, see our previous article here.

Importantly, though, the new offence of ‘failure to prevent the facilitation of tax evasion’ (which we discuss in more detail here) has passed through without amendment.

Osborne Clarke’s view:

Although the Act has now become law, key aspects such as the new failure to prevent tax evasion offence require a separate commencement order before coming into force.  It is not yet clear when this will happen. There has been some suggestion that it could be as early as September or October 2017, but whether or not that is the case, HMRC has made it clear that companies cannot wait until the Act comes into force before taking action to prepare for the new corporate tax offence.

While the offence is primarily aimed at businesses providing tax advice within the financial services sector, the Act is clear that it covers all types of businesses, in all sectors. All companies should therefore be taking steps to prepare for it by widening their risk assessments to ensure they remain compliant. A plan to tackle the risks should also be implemented.

While many of the other reforms brought in by the Act are aimed at those involved in criminal conduct, firms in regulated sectors need to be aware of the changes to the SAR Regime. Those affected will need to tread carefully to avoid committing a ”tipping off” offence during the extended period of investigation that the NCA will now enjoy.