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Corporates in themselves can’t think or act – it’s their members, employees or directors that do so. But they generally are ‘legal persons’, so can commit crimes.

As crime is devolved in Scotland and Northern Ireland, this briefing focuses on England and Wales.

How corporates can be prosecuted

In England and Wales there are three ways a corporate can be prosecuted for a criminal offence committed by those acting on its behalf:

  1. If Parliament has created a specific criminal offence for corporates, such as under the Bribery Act 2010 or the Criminal Finances Act 2017;
  2. Through vicarious liability, which is generally used for regulatory offences that don’t require proof of fault; and
  3. Through the identification doctrine, when someone who can be said to be the “directing mind and will” of a corporate commits the offence.

Calls for reform

Successfully prosecuting large corporates has been challenging, leading to concern the UK is falling behind internationally in tackling corporate crime. The identification doctrine has been interpreted narrowly by the courts, as shown in the 2020 Barclays case, and vicarious liability is limited in its scope. As a result, there has been pressure from politicians and campaign groups to expand the first option – for Parliament to intervene and reform corporate criminal liability. 

Responding to a call for evidence on this issue in November 2020, the Government said it had not identified a clear consensus on the best path for reform, and therefore asked the Law Commission to undertake a review. The Law Commission report was published in June 2022, setting out ten options for reform (but not making recommendations). The options include reforming the identification doctrine and introducing a new criminal offence of “failure to prevent fraud”, but (to the disappointment of some campaign groups) a general “failure to prevent economic crime” offence was rejected for being too broad.  

In the meantime, there has been continued pressure on Government from within Parliament to move faster, most recently through unsuccessful amendments tabled during the passage of the Financial Services Act 2021.

For wider information about economic crime in the UK, see our briefing Economic crime in the UK: a multi-billion pound problem.

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