Criminal Finances Act 2017 Policy

Criminal Finances Act 2017 Policy Development - March 2022

Policy Statement

The Council is committed to ensuring probity in its commercial dealings and requires the same from its employees, agents, advisers and any supplier, provider or other party with which it engages or transacts.

The purpose of this Policy is to put measures in place to ensure that the Council and any associate person complies with the requirements of the Criminal Finances Act 2017. It is the first stage in developing a comprehensive suite of assessments, guidance and checklists to support compliance with the Criminal Finances Act. As awareness and practice matures, further iterations of this Policy will be submitted to Council for approval.

Background

The Criminal Finances Act 2017 (“the CFA”) came into force on 30th September 2017. The CFA amends the Proceeds of Crime Act 2002 and includes provision to
create corporate offences for cases where a person associated with a body corporate or partnership facilitates the commission by another person of a tax
evasion offence and for connected purposes.

Purpose & Scope

Local Government has not been identified as a high risk sector by Her Majesty’s Revenue & Customs (HMRC). However, the broad nature of Council activities
combined with its diverse locations and workforce, may bring the Council, its Officers, Members and associates into contact with other parties who may
contemplate conduct which constitutes an offence under the CFA. Offences under the CFA are not about the Council itself avoiding, evading or underpaying tax, but about it facilitating, or failing to prevent an associated person from facilitating the evasion of tax by a third party.

Under the CFA, an associated person is a person (including a corporate body) who is:

1. an employee of the Council who is acting in the capacity of an employee;
2. an agent of the Council who is acting in the capacity of an agent; or
3. any other person who performs services for or on behalf of the Council who is acting in the capacity of a person performing such services.

For the Council this would include employees, contractors and other organisations performing services for the Council.

The CFA provides that whether a person is an associated person will be determined by all reference to all relevant circumstances.

Offences under the CFA will be committed where the Council fails to prevent an associated person criminally facilitating the evasion of a tax, and this will be the case whether the tax evaded is owed in the UK or in a foreign country. The CFA aims to overcome the difficulties in attributing criminal liability to ‘relevant bodies’ for the criminal acts of employees, agents or those that provide services for or on behalf or a relevant body.

There are a number of duties required by the Council as the body corporate, but equally of its Officers, Members and those associated with the Council. The development and agreement of a suitable policy represents the Council’s initial
endeavours and commitment to discharge these requirements.

Prevention Procedures

In order to safeguard the Council and those associated with it, there are a number of prevention procedures which require to be put in place to prevent tax evasion from being committed or facilitated. These procedures are guided by the following six principles which are not prescriptive, but are designed to be flexible and outcome focused given the variety of circumstances that they are intended to cover. This Policy, which is intended to discharge the requirements of the CFA is based around these principles:

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

Risk Assessment

The Council will assesses the nature and extent of its exposure in relation to the Act including the risk relating to those who act in the capacity of a person associated  with the Council and the potential for them criminally facilitating tax evasion offences.  An initial risk assessment questionnaire will be issued to all Council Services, the Health and Social Care partnership and the East Dunbartonshire Leisure & Culture Trust. The Questionnaire will prompt reflection and consideration of the types of services provided, along with processes and procedures. It is intended that this will
identify areas of potential risk or vulnerability in terms of the CFA.

The responses to the questionnaire will be used to assess risk and create an initial CFA risk register. This, in turn, will prioritise further workstreams to manage and mitigate these risks and refine the CFA risk register. This will be kept under review in accordance with the Council’s established governance arrangements in relation to risk assessments and will support the development of the Corporate Risk Register.

Proportionality of Risk-based Prevention Procedures

The Council has a suite of existing procedures to prevent fraud, irregularity and criminality. The existing Policy base is reasonable and proportionate however consideration is being given to the requirements of the CFA on their scope and
application and includes: 

• Procurement Policy
• Whistleblowing, Corporate Fraud and Corruption, Anti-Bribery and Money Laundering Policies
• Policies dealing with the reimbursement of expenses
• Financial Regulations
• Senior Officer Register of Interests and reporting requirements

This work will be included as part of the ongoing review of the Council’s policy base and specified to prevent persons acting in the capacity of a person associated with the Council from criminally facilitating tax evasion. The risk assessment will consider factors such as opportunity, motive and means, with it:

• Being proportionate to the risk the Council faces.
• Considering the nature, scale and complexity of the Council’s activities.
• Recognising the reasonableness of existing provision prevention procedures.
• Recognising that this work will not require the Council to undertake excessively burdensome procedures in order to eradicate all risk.

Top Level Commitment

There is a requirement for Senior Officers and Elected Members to be committed to the implementation of the CFA. This commitment will initially be demonstrated through the provision of training, with the aim of raising awareness of behaviours or arrangements which may constitute tax irregularity, increasing confidence and skills to challenge such behaviours or proposals and in doing so, further fostering a culture within the Council where fraud, irregularity and evasion is never acceptable and risks minimised.

Due Diligence

The Council will continue to apply due diligence procedures, taking an appropriate and risk based approach. Additional focus will be given to persons who perform or will perform services on behalf of the organisation, in order to mitigate identified risks. In addition, where the service questionnaire referenced above, identifies areas of potential vulnerability then processes, procedures, guidance and skills will be reviewed and bolstered to support compliance.

Communication & Training

The Council will ensure that this, and associated Policies and procedures are communicated, embedded and understood. The development and agreement of this Policy, will be embedded through internal and external communication, including
training. This will include more detailed training in higher risk areas or where officers are best placed to identify potentially criminal acts or behaviours e.g. Legal Services, Finance, Major Assets, Procurement etc. This is proportionate to the risk to which the organisation assesses that it is exposed too and where risk is most likely to manifest.

Monitoring & Review

The Council will monitor and review its preventative procedures and make improvements where necessary. It is anticipated that the nature of the risks faced by the organisation will change and evolve over time. This may be as a natural result of external developments, changes to other seemingly unrelated policies and procedures, implementation of new legislation or services demands. This will require the Council to review, and update its procedures in response to the changes in the risks that it faces.

Penalties Under the Act

Where the Council, Members, Officers or associates are successfully prosecuted under the Act the sanctions may lead to:

• An unlimited fine;
• A public record of conviction; and
• Significant reputational damage and adverse publicity.

The purpose of this Policy, its further development and other steps identified, is to protect the Council both from a reputational and financial perspective.

Obligations of Employees & Other Associated persons

Should employees or other associated persons become concerned that a fellow employee or associate is, or might be, facilitating a third party's tax evasion, they should immediately contact either:

• the Chief Financial Officer; or
• the Chief Solicitor and Monitoring Officer.

Employees should not proceed with any business or transactions that they know or suspect to be related to tax evasion but should seek advice from the above Officers. In addition, the above officers should be contacted if an employee knows or suspects that a third party is in some way utilising or planning to utilise the Council to facilitate tax evasion.

Guidance will be provided to Services to ensure that the Council’s advisers, contractors and other Associated Persons are aware of their obligations under the CFA. Where applicable and proportionate, this will be reinforced with appropriate
terms and conditions in new contracts, award letters and other contractual agreements going forward.

The Council has a number of processes and policies, which will ensure that steps are taken to prevent the facilitation of tax evasion by its employees and associates. These cover the following subjects:

• Procurement Policy, including tender documentation and contracts awarded as a consequence
• Other contractual and other agreements (including funding agreements, grant awards etc)
• Whistleblowing, Corporate Fraud and Corruption, Anti-Bribery, and Anti-Money Laundering Policies
• Reimbursement of Expenses or outlays
• Financial Regulations
• Purchase Orders and associated payment arrangements

In addition to the above, and recognising that tax evasion is a criminal offence, the impacts of the CFA and this Policy will be the subject of consultation with the recognised Trades Unions with a view to reflecting this within the Council’s
disciplinary procedures.

Responsible Officer

The Council has nominated the Chief Finance Officer as the key officer responsible for the CFA within the organisation.
The Council has also nominated the Chief Solicitor and Monitoring Officer as the officer responsible for information, training and general queries on the CFA, who is known as the ‘point person’.