The Corporate Crime Gap: How the UK Lags Behind the US in Policing Corporate Financial Crime
The UK has a serious problem holding its companies to account. If you’re a big multinational company and you’re caught engaging in serious economic crime such as financial fraud or money laundering in the UK, there’s a very good chance that you won’t be found criminally liable. If you’re unlucky, you might be let off with a relatively small fine.
A company committing an economic crime in the US is far more likely to be hit with heavy criminal, civil and regulatory penalties than one in the UK. There is no reason to suppose that this is because US companies are more criminal than UK ones. Indeed, many of the companies that have been penalised in the US are British banking institutions.
Corruption Watch conducted an in-depth analysis of the enforcement of major financial crime and money laundering cases in New York and London over the past decade. We found that the US has imposed penalties 10 times those imposed by the UK on New York and London based banks for financial wrongdoing such as exchange rigging in the Libor and Forex cases, and for money laundering. The US has managed to bring in £22 billion more in penalties for financial crime committed by banks and financial institutions than the UK has, and nearly half (£10 billion) of that was from UK financial institutions.
Corruption Watch argues that the primary reason for this is that the UK’s corporate liability laws for economic crime are antiquated and ineffective, and that the UK’s regulators do not impose sufficient penalties to deter economic crime.
Corruption Watch calls for the UK government to fulfil its commitment to introduce new legislation that would make companies criminally liable where they fail to prevent economic crime such as fraud and money laundering, and to ensure that the Law Commission does a full review of the antiquated corporate liability laws in the UK.
Corruption Watch is also calling for an independent review into whether its regulatory regime is imposing sufficient sanctions that provide real deterrence against corporate financial crime, and whether its regulatory and criminal regimes are coordinated in an effective way