Additional memorandum submitted by Professor
Jeremy Horder (BB 25)
Question—The
Money Laundering Regulations 2007 make it a criminal offence for
a relevant person to fail to carry out (among other things) "due
diligence measures" and "ongoing monitoring" to
prevent money laundering. The regulations provide that "a
person is not guilty of an offence under this regulation if he
took all reasonable steps and exercised all due diligence to avoid
committing the offence"(regulation 45(4)). Can a legitimate
parallel be drawn between this kind of offence and the proposal
that companies be made strictly liable for failing to prevent
bribery, subject to due diligence?
The Money Laundering Regulations 2007 create
a very wide "risk-focused" offence that is regulatory
in character despite the criminal label. It is an offence to carry
out proper monitoring etc, even when that monitoring would have
revealed no money laundering offences committed, nor even the
remotest chance that such an offence would have been committed.
Such an offence cannot be compared to the proposed corporate offence,
which is harm-focused and involves what the courts refer to as
"truly criminal" conduct (not just regulatory transgression),
namely bribery. The difference is perhaps like the difference
between, on the one hand, committing an offence under the HSWA
of failing to ensure that employees are not exposed to risk, and
on the other hand, committing manslaughter through an omission
leading to a fatal accident at work attributable to unsafe working
practices. The fault requirements are higher if a company is to
be convicted of manslaughter (in effect, gross negligence) than
they are if the company is to be convicted of the risk-based HSWA
offence where no harm may have in fact been done.
Given that the offences are so different in character,
I would have thought it right to require proof of a higher fault
element for failing to prevent the actual commission of a criminal
offence (bribery), than is required for failing to reduce the
risk of such an offence occurring (through inadequate accounting
procedures, or whatever). This would then show consistency of
principle with the approach to health and safety risk-creation
(something close to strict liability, with due diligence defence),
as opposed to causing death through health and safety failures
("gross" negligence required).
I am not sure I have much confidence in the analogy
that is being made, in any event. It is arguable that the offence
under the Money Laundering Regulations 2007 is not a wholly strict
liability offence, with a due diligence defence. The offence is
based on a failure to carry out "due diligence" measures
and "ongoing monitoring". That allows a defendant at
least some scope to say that he or she was in fact carrying out
such measures or monitoring, even if the regulator disputes whether
the measures were sufficient to amount to "due" diligence,
or real "monitoring". The defendant may say that this
threshold must be crossed before the due diligence defence even
comes into play. My real point here is that you cannot compare
the unlike with the unlike."
June 2009
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