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Act 2017

Everything you need to know about the Criminal Finances Act 2017

Is It?

The Criminal Finances Act 2017 (CFA 2017 or CF Act) took effect from September 30th and any companies found in breach of the new legislation will now be criminally liable, and fined or charged if they are considered to be failing to prevent tax evasion.

The CFA act itself is the latest in a series of measures aimed to tackle tax evasion and other financial crimes. HMRC themselves explained, “The Government believes that relevant bodies should be criminally liable where they fail to prevent those who act for, or on their behalf from criminally facilitating tax evasion”.

Who Will 
It Affect?

CFA 2017 aims to battle tax evasion through the introduction of two new corporate criminal offences involving the facilitation of domestic and foreign tax evasion:

  • Failure of a company or partnership to prevent facilitation of UK tax evasion
  • Failure of a company or partnership to prevent facilitation of foreign tax evasion

Put simply, the UK Criminal Finances Act 2017 was designed to stop employees, associated people and third parties from committing tax evasion while performing a service for a company.

It’s a move which will go some way to ensuring companies and partnerships are held responsible for the actions of members of staff and external agents, even if they’re not complicit in the act themselves or were unaware of it. The Criminal Finances Act applies specifically to incorporated bodies, rather than the individuals committing the crime.

Just like any other company or partnership, recruitment agencies have a responsibility to ensure their employees and third parties remain compliant with the CFA act.

How to

A study from earlier this year revealed that as many as 76% of senior executives were not even aware of the incoming CFA changes. So after spending little time actually preparing for the U.K. Criminal Finances Act, following its arrival, many recruitment agencies are wondering how to be compliant with the UK Criminal Finances Act 2017.

The CFA imposes strict liabilities on companies, and as mentioned, the burden to ensure staff and third parties are compliant in order to avoid legal action. HMRC’s guidance on CFA 2017 provides businesses with what they describe as “reasonable prevention procedures”.

The six guiding principles outlined in the document are:

  • Risk assessment
  • Proportionality of risk-based prevention procedures
  • Top level commitment
  • Due diligence
  • Communication (including training)
  • Monitoring and review

Responsibility for ensuring that staff and third parties are compliant with CFA 2017 ultimately falls to recruitment agencies, who must be switched on, and take the right steps to educate their employees and only work with trusted partners – whether that’s compliant accountants, compliant insurance specialists or any other third party.

Despite many recruitment agencies failure in adequately preparing for the U.K. Criminal Finances Act, it’s never been more important to take action now.

Impact on

Despite inevitable challenges, with CFA changes now enforced, the recruitment industry itself has an opportunity to truly focus on delivering first-class services and solutions, and ones which are bought and sold based on trust, compliance and value.

As well as helping to ultimately create a fairer marketplace, in time CFA 2017 will no doubt help send a clear message that the industry as a whole prides itself on compliance.