06 June 2014
Sentencing Council Guidelines for Fraud, Bribery & Money Laundering
The Sentencing Council has published a set of definitive guidelines on the sentencing of people convicted of fraud, bribery and money laundering offences. The new guidelines will apply to individuals and organisations who are sentenced on or after 1 October 2014.
In 2013 the Ministry of Justice instructed the Sentencing Council to produce a set of guidelines for the introduction of Deferred Prosecution Agreements (DPAs).
In undertaking this work the Council took the decision to review the current fraud sentencing guidance in order to coincide with the initial application of DPAs in April 2014. The opportunity was taken to update the guidelines and to include previously absent guidance on bribery and money laundering offences.
The implementation of the new guidance follows extensive research and a 14 week draft consultation period during which interested parties had the opportunity to consider and review the relevant proposals.
Although the Sentencing Council cannot increase the maximum sentence available to the Courts, the new guidelines aim to bring the penalties imposed in the UK in line with those available in the United States. This is to be achieved by increasing the starting point in terms of length of sentence and amount of fine. In the case of the most serious offenders this could lead to a custodial sentence of up to 14 years.
In calculating the sentence for individual offenders, the Court will firstly determine the category of the offence by assessing the level of culpability. This is achieved by taking into account factors such as whether the offence was conducted for a sustained period of time which will lead to higher culpability, or whether the offender had limited awareness of the extent of the unlawful activity which may lessen the degree of culpability. The list is non-exhaustive and the Court will balance all relevant factors when deciding the appropriate level of culpability
Next the impact of the offending plus the actual or intended gain to the offender is assessed to establish the harm that has been done by the offending. The levels of culpability and harm as determined by the Court are then used to calculate the length of the custodial sentence imposed. The sentence is then further assessed by considering aggravating and mitigating factors in relation to the starting point. The Court will also further adjust the length of the sentence to take into account whether the individual assisted with the investigation and the submission of an early guilty plea. Finally the Court will consider the suitability of a confiscation or compensation order or any ancillary orders, such as disqualifying the individual from acting as a company director.
- Individual ‘A’ is a director of Company ‘X’. Individual ‘A’ accepts a bribe contrary to s.2 Bribery Act 2010.
- As a result of the bribe Individual ‘A’ is expecting to make a substantial financial gain through various external company shareholdings – higher level culpability.
- The Court finds there is a risk of substantial financial loss to others and calculates harm as Category 3. Therefore the starting point of the sentence is 3 years’ custody.
- Individual ‘A’ has no previous convictions – mitigating factor.
- Custodial sentence is reduced to 2 years.
- Individual ‘A’ enters a guilty plea once the trial date has been set, for which the Court reduces the length of the sentence by one quarter.
- The sentence is calculated at 18 months’ custody.
- The offence did not result in any actual financial loss or damage to the victims and therefore the Court decides it is not appropriate to grant a compensation or confiscation order.
- The Court orders Individual ‘A’ be disqualified from acting as a company director for 5 years.
Shift in Focus
The research undertaken on behalf of the Sentencing Council illustrated the need to examine the broader impact of fraud on the victims of the offence. Whereas the previous guidelines, issued by the Sentencing Guidelines Council in 2009, focused primarily on the resulting financial loss, the new rules aim to take into account both financial harm and the wider detrimental effect of the crime on the victim. This can include emotional harm and suffering substantial damage to their credit rating.
Chairman of the Sentencing Council, Lord Justice Treacy, said: "Fraudsters are in it to make money, but for their victims it can mean much more than losing money. Our research with victims showed the great impact it can have on them, so the guideline puts this impact at the centre of considerations of what sentence the offender should get."
The new victim-centric guidelines also aim to place an increased focus on victim vulnerability and offender culpability. For example a greater sentence may be imposed where the victim is particularly vulnerable with regards to their age, mental capacity or financial situation, or in cases where the offender has abused a position of trust or responsibility.
In a time of greater business supervision and increased regulatory fines following the financial crisis some, including the Serious Fraud Office, have also called for companies to face increased criminal liability, and this is the subject of a separate S&G blog. Whilst these latest developments are a step short of such a reform, once in force the definitive guidelines will encourage a stronger more consistent approach to sentencing both individual and corporate offenders convicted of fraud, bribery and money laundering.
Slater and Gordon Lawyers have over 30 years experience and are acknowledged independently as leaders in this field. We can assist both individuals and businesses if:
- The authorities want to speak to you about an investigation
- You might face prosecution for a dishonesty offence
- You have been charged with an offence.