‘Too Scared to Prosecute and Too Scared to Jail?’ A Critical and Comparative Analysis of Enforcement of Financial Crime Legislation Against Corporations in the USA and the UK

Abstract

This article has two aims. First, it critically considers the responses towards tackling corporate financial crime in the USA. Secondly, it analyses the UK’s efforts to tackle corporate financial crime and then compares them with the USA. The USA presents an interesting case study for this article due to its robust and aggressive stances towards tackling financial crime and also because it is one of the largest financial markets. Similarly, the UK has adopted a strong stance towards tackling financial crime and is also regarded as one of the most important global financial centres. Therefore, by comparing the two contrasting approaches towards corporate financial crime, it is hoped that the best practices from each country could be adopted. The first section of the article concentrates on the judicial response towards corporate financial crime in the USA and it then moves onto highlight and critique the decision of the US Department of Justice (DoJ) to alter its enforcement policy by moving away from indicting corporations to using deferred prosecution agreements (DPAs). Here, the continued use of DPAs is questioned because they have had a limited impact on the future conduct of corporations who are persistent reoffenders. The article sets out a wide range of arguments for why DPAs should not be the enforcement weapon of choice for the DoJ. The final part of this section critiques the ability of law enforcement and financial regulatory agencies to impose financial penalties and bring civil actions for a wide range of financial crimes under the Financial Institutions Reform, Recovery and Enforcement Act 1989. The second part of the article concentrates on the UK and concisely assesses the doctrine of corporate criminal liability, thus identifying the contrasting judicial approaches with the USA. The next section discusses the use of DPAs for breaches of the Bribery Act 2010 by the Serious Fraud Office. The section advocates that in the UK, DPAs must be utilised for a broader range of financial crime offences, thus drawing on the US model. The penultimate segment of the article identifies and comments on several alternative enforcement measures which could be used to counteract the limitations of the doctrine of corporate criminal responsibility in financial crime cases. This distinctively includes the Financial Conduct Authority’s Senior Managers and Certification Regime, its ability to impose financial penalties and to revoke the authorisation of a regulated corporation. The article concludes by making a number of recommendations and suggested reforms, thus further developing the scope of this research.