Criminal Finances Bill creates new headwind for banks
The UK Criminal Finances Bill received Royal Assent yesterday, meaning that corporations will now face the risk of an unlimited fine and a criminal conviction if any employee facilitates tax evasion.
Commenting, James Siswick, Partner, Risk Consulting, KPMG UK, said:
“In a week when UK banks begin to show signs of getting their costs under control another set of compliance requirements comes along which could expose them to unlimited fines and reputational damage.
“From September, all financial institutions will be on the hook for the conduct of their staff. This isn’t just a case of reassessing product offerings and having a firm word with the tax department, the Criminal Finances Bill will apply to all business activity, so could be triggered by erroneous treatment of employee expenses or missing VAT on a window cleaning bill. Institutions now face the task of assessing where their risks lie and how to implement reasonable procedures to manage them.
“The challenge is not limited to the UK. Global institutions with a UK presence could be subject to UK criminal proceedings if an employee anywhere in the world is found guilty of facilitating tax evasion. The additional risk and compliance challenges this poses are significant and come at a time when Brexit is already causing uncertainty for some businesses.
“Whilst few firms will be jumping for joy at the prospect of more compliance, the price of getting it wrong will help make the UK a leader in compliance and should also act as a driver for good corporate culture. Making the whole firm responsible for the actions of individuals will force firms to think very carefully about the type of people they employ and may also lead to a spike in whistleblowing."
