Senior mangers warned to get more involved in compliance

Wednesday 09 November 2016

Senior management will have to take a hands-on approach to compliance when the new UK offence of failing to prevent the facilitation of tax evasion comes into force, says Ogier's Head of Regulatory Services.

Partner Nick Williams says that the new strict liability offence, will specifically demand that senior management take a direct role in promoting a culture of awareness and zero-tolerance.

The law – currently contained in the UK's Criminal Finances Bill which was introduced to the House of Commons last month and is expected to be enacted next year - could potentially reach companies and partnerships outside of the UK, and places an onus on them to demonstrate that their culture and processes create a focused engagement on preventing the facilitation of tax evasion.

 Mr Williams said: "All firms involved in the financial services sector will have their own existing suite of compliance and regulatory obligations that they are familiar with, but it will not be enough to rely on those procedures in respect of the new law.

"This legislation specifically requires engagement from those at the top of organisations, and demands that they can demonstrate that they are integrally involved in efforts to prevent the facilitation of tax evasion.

"It will also demand specific risk assessment and due diligence processes as well as regular updates to staff training.

"From a regulatory point of view, any financial services provider which has a nexus with the UK or whose clients or customers are UK tax payers – no matter where that financial services provider is actually based - should be considering updating their procedures so that they can demonstrate an adequate approach to prevention. Whilst further guidance has been promised, existing guidance is sufficient for businesses to begin this process.  Rapid implementation will be expected as and when the legislation is enacted, so early preparation is potentially very important."