Review urges UK government to reform disclosure and fraud offences

The second part of Jonathan Fisher KC’s independent review, on fraud in the digital age, argues that the UK’s response to fraud must move away from a largely reactive model towards one that is proactive, preventative and focused on disrupting criminal activity before harm occurs. Fraud now accounts for nearly half of all surveyed crime, with digital technologies enabling offenders to operate at scale, across borders and with a relatively low risk of detection, according to the review.

Melanie Ryan, a regulatory law expert at Pinsent Masons, said: “The recommendations reflect the growing trends for private and public body cooperation and collaboration to address risk and to hold online platforms accountable for their content. However, care will be required to ensure that the response is proportionate and does not place an undue burden on private organisations.”

Among the proposals is a recommendation that the government consult on the introduction of a whistleblower reward scheme designed to encourage individuals with inside information to report fraud and economic crime. The review also recommends creating a criminal offence for those who harass or intimidate whistleblowers, alongside a separate offence for individuals who knowingly submit false reports under any incentivisation scheme.

On whistleblower incentives, Ryan said the review would be welcomed by the Serious Fraud Office (SFO), which has long advocated for such a scheme.

“The SFO has long called for some sort of incentive to encourage information sharing, so the regulator will be pleased to see that its views are endorsed by the independent review, with the safeguard of criminal liability attaching to knowingly false statements. Information from those on the ground can be invaluable in detecting and investigating crime but concerns about the quality of evidence encouraged by a financial incentive have caused some to question its use.  This safeguard should go some way to assuage this concern. However, full details of the proposed scheme will be required to ensure this risk is minimised,” she said.

The report proposes a series of measures intended to increase accountability for online platforms and corporates. These include a new corporate criminal offence for providers of regulated user-to-user services under the Online Safety Act that fail to prevent fraud on their platforms, civil penalties for consumers who knowingly purchase fraud-enabling products online, and an anti-fraud levy intended to increase social media companies’ contributions to tackling fraud. The review also recommends doubling the maximum sentence for serious fraud and money laundering offences from 10 to 20 years.

Other recommendations focus on strengthening public-private cooperation. Fisher argued that intelligence sharing within economic crime partnerships should operate within a statutory framework, while calling for greater clarity around the operation of the Proceeds of Crime Act 2002 ‘tipping off’ provision to give organisations confidence when sharing information intended to combat criminality.

The review also revisits enforcement tools available to prosecutors. One notable proposal is the introduction of a court supervised deferred prosecution mechanism for directors, senior managers and, where appropriate, other employees implicated in serious corporate economic crime. The mechanism would operate alongside, and not in place of, corporate liability.

Ryan said: “Individual prosecutions are often long and complex and have not always produced the convictions hoped for by law enforcement. Whether, in such circumstances, an individual would or should be encouraged to enter into a deferred prosecution agreement is unclear, but it does raise questions about balancing convenience against the rule of law and the presumption of innocence."

Alongside publication of the second report, the government also released its response to the first part of Fisher's review, which examined the criminal disclosure regime. Ministers said they would carefully consider the review’s recommendations as part of the government's broader efforts to modernise the UK's response to fraud and economic crime.