By Jessica Frank-Keyes
MPs have criticised the government for “dragging its feet” over the Economic Crime Bill, after a string of measures aiming to toughen up dirty money protections were voted against or watered down.
Peers had passed a series of amendments to the legislation aimed at fighting back against economic crime, fraud and illicit wealth prior to Parliament’s summer recess.
However the government overturned amendments made by peers, with business minister Kevin Hollinrake arguing they would “pose significant and disproportionate burdens on business”.
On property transparency Hollinrake said the government intended to launch a consultation by the end of the year.
The amendment would have meant the failure to prevent fraud offence applies to all firms, of any size.
Proponents of the measure in the Lords want to place the responsibility to catch fraudulent activity onto the companies themselves rather than law enforcement or regulatory bodies.
But MPs voted on Monday to exclude SMEs from the new offence, meaning it will only apply to around 0.5 per cent of UK firms, unless a compromise with peers over its wider application is later reached.
Votes against improving property and company ownership transparency also took place.
Dame Margaret Hodge, an MP and anti-corruption campaigner, urged the government to think again, saying: “This is a real missed opportunity to start turning the tide against dirty money.
“Everybody knows, including the ministers, that a strong ‘failure to prevent’ offence is a real game changer – it would finally change behaviour and deter wrongdoing.”
Seema Malhotra, Labour’s shadow minister for business and consumers, said the bill must “go further” to “clamp down on economic crime”, which she said cost the UK £290bn a year.
She added: “The government have dragged their feet yet again by voting against the vital amendments, continuing their record of failure in protecting victims of economic crime.”
Natalie Sherborn, partner at Withers, told City A.M.: “Reintroducing the thresholds will mean that the failure to prevent offence will apply to just 0.5 per cent of all businesses in the UK.
“Given the primary purpose of the legislation is to drive culture change and act as a deterrent one has to wonder whether this amendment sends the right message to UK corporates.”
Speaking during the Commons debate, former justice secretary Sir Robert Buckland urged MPs to support the amendments and back the Serious Fraud Office in cracking down.
“We do not want to be a jurisdiction where it is too easy to commit fraud that benefits corporates,” he said.
“Where there is a criminal legal framework that is clear, certain and stable, that can only encourage investment into the United Kingdom.”
And writing in the Times, he urged: “Stop pussyfooting around… honest business is good business that leads to repeat business and more inward investment.”
The Treasury has been contacted for comment.
