1. ‘Corporate Liability for Economic Crime – merely window dressing or a statement of intent’
Presentation by
Nicholas
Ryder
Professor in Financial Crime
Thursday, September

2. Corporate Liability for Economic Crime
Abstract
What is white collar crime?
The extent of financial crime
Financial Crime Legislation
Key Regulatory Agencies
Did they get away with it?
Enforcement activities
Recent Developments
Corporate Liability for Economic Crime

3. What is white collar crime?
The term was first used by Edwin Sutherland (1939):
“a crime committed by a person of respectability and high social status in the course of his occupation”
white-collar criminals include:
robber barons,
merchant princes, and
captains of finance and industry.
But is this definition still relevant in 2017?
Is it time to extend the definition to apply to companies?
Corporate Liability for Economic Crime

4. Extent of Financial Crime
Fraud:
Money Laundering
National Fraud Authority (2011) - £39bn
National Fraud Authority (2012) - £73bn
National Fraud Authority (2013) - £52bn
Between 2 and 5 % of Global GDP, approximately $1.6tn (United Nations, 2009)
Between $590bn and $1.5tn per year (FATF),
National Crime Agency: £36-90bn
Corporate Liability for Economic Crime

5. Financial Crime Legislation
Money Laundering:
Proceeds of Crime Act 2002
Money Laundering Regulations 2017
Crime and Courts Act 2013
Criminal Finances Act 2017
Fraud:
Criminal Justice Act 1987
Fraud Act 2006
Bribery/Corruption:
Bribery Act 2010
Corporate Liability for Economic Crime

6. Financial Crime Legislation
The Financing of Terrorism
Terrorism Act 2000
Anti-terrorism, Crime and Security Act 2001
Terrorism Act 2006
Counter-Terrorism Act 2008
Terrorist Asset-Freezing etc. Act 2010
Corporate Liability for Economic Crime

7. Financial Crime Legislation
Market Manipulation
Financial Services (Banking Reform) Act 2013 s. 36
Financial Services Act 2012 s Part 7
Market Abuse
Financial Services and Markets Act 2000 s 118
Insider Dealing
Criminal Justice Act 1993 Part V
Corporate Liability for Economic Crime

8. Key Regulatory Agencies
Serious Fraud Office
Financial Conduct Authority
National Crime Agency
Corporate Liability for Economic Crime

9. Did they get away with it?
The Secondary Banking Crisis,
Johnson Matthey Bank,
Barlow Clowes,
BCCI,
Barings Bank,
HSBC – money laundering and terrorist financing,
RBS – purchase of ABM Amro,
HBOS – Fraud and
Barclays?
Corporate Liability for Economic Crime

10. Enforcement activities
Financial Conduct Authority
2007 £5.3m
2008 £22.7m
2009 £35m
2010 £66.1m
2011 £89.1m
2012 £311.5m
2013 £474.1m
2014 £1.47bn
2015 £905m
2016 £22.2m
2017 £163.3m (September 2017)
Corporate Liability for Economic Crime

11. Enforcement activities
Serious Fraud Office:
2001/ %
2006/ %
2007/ %
2008/ %
2010/ %
2011/ %
2012/ %
2013/ %
2014/ %
2015/ %
Corporate Liability for Economic Crime

12. Enforcement/Sanctions
MLRO
Bank
Michael Wheelhouse was fined £17,500 (October 2008)
Sudipto Chattopadhyay fined £14,000 (May 2010)
Syed Itrat Hussainn £17,500 (May 2012)
Coutts & Company £8.75m (March 2012)
EFG Private Bank £4.2m (March 2013)
Standard Bank Plc £7.6m (January 2014)
Deutsche Bank £163m (January 2017)
Corporate Liability for Economic Crime

13. Corporate Liability for Economic Crime
Sanctions: Libor
2015:
Deutsche Bank £227m (FCA)
Barclays £284m (FCA)
2014:
Lloyds Bank and Bank of Scotland, £105m (FCA)
Martin Brokers (UK) Ltd £630,000 (FCA)
2013:
Rabobank, £105m (FCA)
ICAP Europe Ltd, £14m (FCA)
Royal Bank of Scotland, £85m (FCA)
2012:
UBS AB, £160m (FCA)
Barclays Bank, £59.5m (FCA)
Corporate Liability for Economic Crime

14. Enforcement/Sanctions
Bribery and Corruption:
Prosecutions:
Yang Li – the failing student
Munir Yakub Patel – the Magistrates Court Clerk
Mawia Mushtaq –  the driving examinee
Deferred Prosecution Agreements:
Standard Bank,
XYZ,
Rolls Royce and
Tesco.
Corporate Liability for Economic Crime

15. Corporate Liability for Economic Crime
Recent Developments
Cabinet Office Review (2016)
“The Cabinet Office will look at the UK’s response to economic crime more broadly … [t]his will include looking at the effectiveness of our organisational framework and the capabilities, resources and powers available to the organisations that tackle economic crime” (Amber Rudd, Home Secretary)
full terms of reference have not been made publically available
prompted increased anxiety from current law enforcement and regulatory agencies
Corporate Liability for Economic Crime

16. Corporate Liability for Economic Crime
Recent Developments
Corporate Liability for Economic Crime (January 2017)
Amendment to identification doctrine
Strict (vicarious) liability offence
Strict (direct) liability offence
Failure to prevent an element of the offence
Investigate the possibility of regulatory reform on a sector by sector basis
Corporate Liability for Economic Crime

17. Corporate Liability for Economic Crime
Questions?
Is it time for the corporate death penalty?
Important position of financial services sector?
Too scared to prosecute?
Too scared to jail?
Political appetite?
Corporate Liability for Economic Crime