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Fraud and money laundering: the evolving criminalization of corporate non‐compliance

John L. Masters (CPS Fraud Prosecution Service of England and Wales, York, UK)

Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 9 May 2008

Abstract

Purpose

The Corporate Veil is seen not only as a means of limiting individual civil legal liability but also criminal liability. This paper seeks to highlight that this philosophy is fast approaching breaking point, and practices which once may have been considered “just business” are now considered criminal. Innocuous companies, their directors and officers have all of a sudden become sitting ducks for criminal prosecution and asset seizure. Corporations potentially risk metaphorical death sentences: their human controllers being labelled and treated as common criminals and accordingly disgraced, incarcerated and confiscated of a lifetime of accumulated wealth. This paper targets the “directing minds and wills” of companies and aims to invoke thought and action on redefining the notion of corporate compliance.

Design/methodology/approach

An analysis of recent innovations in mostly UK law regarding fraud and money laundering, with historical comparisons to show the changing community and legal perceptions – “the evolution”. There is also case study analysis and recent examples of community attitudes towards recent high‐profile commercial prosecutions.

Findings

That there is a definite change in how the public, lawmakers and governments perceive corporate non‐compliance, to the extent that most breaches qualify as criminal offences and that due to mutual legal assistance and incentivisation schemes, the risks to corporations and its officers are extremely high and real.

Practical implications

Corporations will need to be genuine about legal compliance beyond merely espousing platitudes and motherhood statements and more towards reinventing the compliance paradigm. This means that merely concentrating on strict legal compliance will no longer suffice. Corporations will need to establish and regularly revisit their values, with more emphasis on embedding a culture of compliance that is attuned to domestic and international community values. To choose to ignore these needs, risks the very existence of the company and also its officers being ostracised both commercially and criminally.

Originality/value

Traditionally, papers on this topic tend to concentrate on strictly legal or managerial issues. This paper looks at the issue from a more criminological perspective whilst not compromising legal analysis and business pragmatism, thus allowing an integration of disciplines in a context that can be appreciated by lawyers, managers and social scientists alike.

Keywords

Citation

Masters, J.L. (2008), "Fraud and money laundering: the evolving criminalization of corporate non‐compliance", Journal of Money Laundering Control, Vol. 11 No. 2, pp. 103-122. https://doi.org/10.1108/13685200810867447

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited