ENGLAND & WALES Law and Practice Contributed by: John Kaye and Piers Desser, Carson Kaye
The UK has a comprehensive Anti-Money Launder - ing compliance regime under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Regulated firms must conduct risk assessments, customer due diligence, ongoing monitoring and report suspicious activity to the authorities. Failure to comply can result in criminal liability, regula - tory enforcement (including substantial fines and busi - ness restrictions) and personal sanctions for senior individuals. Enforcement is active, particularly by the FCA and HMRC, with an increasing focus on systems, controls and senior management accountability. 3.4 Financial Services Crime The offences relating to market conduct and unau - thorised financial activity arise primarily under the Criminal Justice Act 1993 (CJA 1993) and the FSMA, alongside retained EU-derived market abuse rules as applied through UK regulation. Insider dealing under the CJA 1993 occurs where an individual who has “inside information” deals in price- affected securities on a regulated market, encourages another to do so or discloses the information outside the proper course of employment. “Inside informa - tion” must be precise, non-public and likely to have a significant effect on price. The offence requires knowl - edge that the information is inside information and was obtained through a privileged position. Market manipulation is primarily addressed through the UK MAR, enforced both civilly and criminally. Con - duct includes transactions or orders that give false or misleading signals as to supply, demand or price or that secure prices at abnormal levels, as well as dis - semination of false or misleading information. Misleading statements and impressions can also give rise to criminal liability under FSMA, particularly where an individual makes false or misleading statements or engages in deceptive behaviour, in relation to financial markets or investments. Unauthorised financial services activity is criminalised under FSMA where a person carries on a regulated
activity in the UK without authorisation or exemption from the FCA. Penalties include up to seven years’ imprisonment for insider dealing, and up to two years’ imprisonment and/or unlimited fines for FSMA offences, alongside significant FCA enforcement powers, including prohi - bition orders and financial penalties. 3.5 Tax Evasion and Financial Reporting In England and Wales, criminal offences relating to tax evasion and financial record-keeping arise under a combination of common law, statute, and specific tax legislation. Tax evasion is primarily prosecuted under the com - mon law offence of cheating the public revenue, as well as statutory offences in the Taxes Management Act 1970, Value Added Tax Act 1994 and related leg - islation. These offences typically involve dishonest conduct intended to evade tax, such as submitting false returns, concealing income, or making fraudulent claims for reliefs or repayments. The mental element is dishonesty, assessed under the objective test in Ivey v Genting Casinos , plus intent to permanently deprive the Revenue of funds. False accounting is an offence under Section 17 of the Theft Act 1968 and covers dishonestly destroying, defacing, concealing or falsifying accounting records, or producing misleading accounts with a view to gain or causing loss. It is commonly used in corporate fraud and internal accounting manipulation cases. Inaccurate financial records may also engage offences under company law, including breaches of the Com - panies Act 2006, particularly where directors know - ingly or recklessly approve misleading accounts or fail to keep proper accounting records. In addition, the UK has introduced corporate criminal liability through the Criminal Finances Act 2017, which creates two strict liability offences of failure to prevent the facilitation of UK tax evasion and foreign tax eva - sion. A corporate entity is liable where an associated person facilitates tax evasion, unless it can demon - strate that it had reasonable prevention procedures
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