Firms on the hook for failure to prevent tax evasion

After an incensed hacker circulated 2.6 terabytes of data – 11.5 million confidential documents – from Panamanian law firm Mossack Fonseca last year, the United Kingdom hurried forward its proposed criminal offence for corporations who fail to stop their staff from facilitating tax evasion. With the legislation now in force, prosecutors no longer have to prove that a ‘controlling mind’ from the organisation was complicit in the breach. David Rundle and Chloe Salter outline the new crime, key aspects of HM Revenue & Custom’s guiding principles, as well as central issues that financial services businesses should consider.

David Rundle is a senior associate in WilmerHale’s United Kingdom investigations and criminal litigation practice, where Chloe Salter is a paralegal. Contact David on david.rundle@wilmerhale.com.

The Criminal Finances Act 2017 came into force on 30 September 2017. [1] The Act contains a patchwork of new powers, and amendments to existing legislation, largely directed at combatting money laundering and terrorist financing. It also creates a new corporate criminal offence of failing to prevent the facilitation of tax evasion, which poses significant risk to financial services firms.