Scotland commends innovative strategy against financial misconduct

The Scottish legal landscape has seen a significant shift with the extension of the self-reporting and leniency programme under the Economic Crime and Corporate Transparency Act (ECCTA). This development, commended by corporate crime experts, aims to address economic crime in Scotland and enable businesses to be part of the solution.

Previously, self-reporting initiatives were only available for instances of bribery, introduced in 2011. Now, the new laws around failure to prevent fraud have come into effect, expanding the scope of the programme.

The leniency initiative, applicable within the United Kingdom, now covers all corporate failure to prevent offences under the Bribery Act 2010, Criminal Finance Act 2023, and ECCTA. This includes principal offences of fraud and bribery where an organization is criminally liable under a newly introduced "senior manager" test of attribution.

David Lister, a forensic accountancy expert at Pinsent Masons, has stated that the assessment of quantum under the leniency initiative is attractive for businesses. The assessment of quantum is based on a modified POCA (Proceeds of Crime Act) quantification and focuses on the assessment of the benefit obtained from the suspected offending.

Companies and organizations that self-report economic crimes could negotiate a civil settlement in exchange for full disclosure and remedial action. This approach provides auditors and other important stakeholders with visibility and clarity of approach under the leniency initiative.

The Scottish regime is significantly more lenient than the deferred prosecution agreement regime that operates in England & Wales. Tom Stocker, another corporate crime expert at Pinsent Masons, stated that this development shows the Scottish authorities are serious about tackling economic crime.

The Crown Office and Procurator Fiscal Service (COPFS) has extended its self-reporting and leniency programme. Adopting a profit-based calculation can be challenging but reasonable resolutions are achievable under the leniency initiative.

The leniency initiative will help businesses that are ethical and wish to address fraudulent and corrupt conduct to do so without irreparable harm being caused to their business. It is an opportunity for companies to demonstrate their commitment to transparency and combat economic crime proactively.

However, there is no information available about the leadership of the Scottish Government's Civil Recovery Unit responsible for negotiating and settling civil recoveries related to the extended self-reporting initiative for businesses in Scotland.

In conclusion, the extension of the self-reporting and leniency programme in Scotland marks a crucial step towards combating economic crime. It provides a path for businesses to self-report and take remedial action, fostering a culture of transparency and accountability.