Economic crime in the UK: the writing is on the wall - the key to preparation lies in your fraud risk assessment

April 15, 2019

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Jonathan  Holmes

Jonathan Holmes | Partner
Profile | Email | +44 (0)20 7212 7219

Oliver Delve

Oliver Delve | Senior Manager
Profile | Email | +44 (0)7711 562266

In today’s regulatory environment we think that economic crime risk assessments are critical protection against corporate criminal offences. In contrast, the UK results of our latest Global Economic Crime survey don’t reflect this business imperative.

Our survey found that half of UK businesses have not carried out a general fraud risk assessment in the past two years and as recent events continue to sign post a future shift in the regulatory landscape the debate starts to look at not if but when regulatory change might take place we predict this behaviour is set to change.  

The current regulatory landscape and what the future may hold

The Bribery Act 2010 (recently described as “an excellent piece of legislation which creates offences which are clear and all-embracing” by the House of Lords Bribery Act 2010 Select Committee) introduced both the ‘failure to prevent offence’ as well as the principle that a corporate defence of ‘having adequate procedures starts with a risk assessment’.

Similarly, the Corporate Finances Act 2017 introduced a similar corporate criminal offence of failure to prevent tax evasion and again a defence of reasonable procedures (no meaningful difference between reasonable and adequate according to the House of Lords).

In the past few weeks, both the Treasury Committee inquiry into economic crime and the House of Lords Bribery Act 2010 Committee have published calls for the UK Government to consider extending the remit of offences across a fuller range of economic crime offences including fraud, accounting misstatement and money laundering.

The Ministry of Justice (MoJ) held a consultation on corporate liability for economic crime in early 2017. The House of Lords committee hopes that government will “delay no more” in analysing this evidence. Guidance from both the MoJ and HMRC consider Six Principles for the prevention of the offences being committed. These include the risk assessment: an assessment that is periodic, informed and documented.

Getting on the front foot

Effectively responding to regulatory change is a challenge for many organisations. While many may understand what existing practices they have in place now, it is more challenging to get information on what best practice looks like, what changes are needed to get there and actually implementing these changes to best fit the needs of your organisation. We help many of our clients on preventing economic crime and help them to get on the front foot, rather than wait to be reactive in the face of crisis.

Using knowledge of your organisation’s existing risk assessment and management processes (including Governance, Risk assessment & prevention, Detection and Response), we identify where your organisation sits on sliding scale from ‘Initial’ to ‘Optimised’, using our benchmarking tools and experience of what ‘good looks like’. The development of our Fraud Risk Maturity tool is a response to the findings of our Global Economic Crime Survey and what our clients will need with the change of regulations; in short, it helps you step back and check on where you are and where you want to get to.

We then help you to identify what changes need to be made and how to make them, ultimately ensuring that your organisation is better prepared to respond to the risks presented by economic crime offences. It’s about protecting your business value and ultimately emerging stronger - we’re there every step of the way.  

If you’re interested in learning more please get in touch.

 

Jonathan  Holmes

Jonathan Holmes | Partner
Profile | Email | +44 (0)20 7212 7219

Oliver Delve

Oliver Delve | Senior Manager
Profile | Email | +44 (0)7711 562266