We examine what might be the biggest change to corporate criminal law in a century as the Economic Crime and Corporate Transparency Bill (referred to as "the Bill") approaches the end of its course through the UK Parliament.

There are provisions in the bill that might alter how corporations are held accountable for particular economic crimes. The first clause would create an offense for failing to prevent fraud, while the second would modernize and codify the corporate identification principle.

A business, despite having a distinct legal identity, can only act through its officials and workers; for more than a century, the courts have discussed the circumstances under which people's individual actions can be attributed to the company.

It was now widely acknowledged that the standard used in the Tesco Ltd. v. Nattrass decision from 1972 is the right one when determining criminal responsibility. This basically indicates that in order for the dishonest act to be attributed to the firm, it had to involve a person with enough seniority within the organisation who, in order to carry out the specific task at hand, was acting as the "directing mind and will" of the company. This is known as  the “identification principle”.

In actuality, it is challenging to prove this. Since this notion was established, organisations have changed, and because of their size and sprawl, it is frequently impossible to form a controlling mind and will in modern corporate organisations. On the other end of the scale, it is disproportionately simpler to bring charges against small companies since it is easier to identify the directing mind and will.

With regard to economic crimes like fraud, successive administrations have debated whether and how to remedy this apparent injustice, and the Law Commission was most recently tasked with exploring potential solutions in 2020. As a result, the present government pledged in its "Economic Crime Plan 2" and "Fraud Strategy" to modify the identification concept in criminal offenses. As a result, the Home Office declared on April 11, 2023, that the Government would establish a failure to prevent fraud offence.

There is still time for more modifications to be made before the Bill is passed and becomes law.