19 February 2014

New sentencing guidelines for fraud, bribery and money laundering offences

Tessa Lorimer
Consultant | UK

The Sentencing Council recently issued useful guidelines regarding sentencing in relation to fraud, bribery and money laundering corporate offences. These guidelines apply to all organisations sentenced on or after 1 October 2014, regardless of the date of the offence.

According to these guidelines, priority must first be given by the court to the payment of compensation for any injury, loss or damage resulting from the offence. If a compensation order is not made by the court, it should provide reasons explaining why this was not the case.

The court must then consider whether a confiscation order is appropriate in the circumstances, before going on to determine the level of fine which should be imposed.

In order for it to be able to perform this assessment, it must consider the culpability of the offending corporation and the harm suffered. Factors which could lead to an increased level of culpability include organised activity, targeting of vulnerable victims, a sustained period of offending or abuse of a dominant market position. If a corporation was involved in illegal activities through coercion, intimidation or exploitation this would result in lesser culpability. The amount of harm suffered will depend on the offence but will generally be calculated based on the amount gained by the offender.

Having categorised the offence and calculated the harm suffered, the court will then determine the appropriate starting point for a fine. By way of an example, if the organisation is found to be highly culpable, the range of the fine would be between 250% – 400% of the harm calculated earlier. The court will then consider a number of aggravating and mitigating factors before deciding the appropriate starting point for a fine. Factors include attempts by organisations to conceal misconduct (or alternatively co-operation in any investigation), previous relevant convictions (or lack thereof), and the actual loss suffered by the victims.

In general, the court should determine a level of fine which reflects the seriousness of the offence and takes into account the financial circumstances of the offender.

Having calculated the level of the fine, the court must then consider what other factors may exist which merit an adjustment on the level of the fine. The court's objective should be to achieve (a) removal of all gain by the organisation; (b) appropriate additional punishment; and ( c ) deterrence.

Finally, the court should consider any factors which would indicate a reduction in the level of fine, such as assistance to the prosecution or early guilty pleas.

When sentencing, the courts are under an obligation and duty to provide reasons for the sentence and an explanation of its effect.

Tessa Lorimer Consultant | London

Category: Article