As global scrutiny of corporate wrongdoing intensifies, governments are being pressed to close gaps in legal frameworks that allow powerful organisations to escape accountability.
The United Kingdom’s proposed Crime
and Policing Bill 2025, which builds on the Economic Crime and Corporate
Transparency Act 2023 (ECCTA), signals a fundamental shift in how corporate
criminal liability is approached.
For Malaysia grappling with
recurring corporate scandals and persistent enforcement gaps these developments
offer a timely lesson in legal reform.
The UK’s current reforms break
from its traditionally narrow “identification principle,” under which corporate
criminal liability hinged on proving that the directing mind and will
(typically, board-level executives) possessed the necessary criminal intent.
This model had long struggled to
hold large, complex corporations accountable, as misconduct often occurred
several layers below board level.
The result was a form of de facto
immunity for major corporations an issue Malaysia knows too well from
high-profile cases like 1MDB.
The ECCTA, along with the
proposed Crime and Policing Bill, challenges and reshapes the existing status
quo.
The UK is introducing a broader
“senior manager” test that attributes liability to a corporate entity if a
senior manager, acting within their actual or apparent authority, commits an
offence.
Initially limited to economic
crimes such as fraud and bribery, the new Bill proposes to expand this
principle to all criminal offences, including environmental breaches, health
and safety violations, and potentially even regulatory offences under data protection
or competition law.
Should Malaysia give serious
consideration to this matter?
The Relevance for Malaysia
Malaysia has made progress in
recent years with frameworks like the corporate liability provision under
Section 17A of the Malaysian Anti-Corruption Commission Act 2009, which imposes
liability on companies for bribery committed by associated persons.
But unlike the UK’s evolving
regime, Malaysia’s framework remains limited in scope. It does not yet offer a
comprehensive system that attributes liability to senior individuals beyond
bribery, nor does it extend to a broader array of corporate misconduct.
In an era where corporate actors
are transnational, crimes like money laundering, tax evasion, and environmental
damage frequently cut across jurisdictions.
Yet Malaysia’s legal system lacks
the robust extraterritorial reach that both ECCTA and the proposed UK Bill
provide. The UK reforms allow for corporate liability even where only part of
the conduct occurs in the UK, or where the victim is a UK national.
Malaysia must adopt a similarly
outward-facing approach, particularly given the global footprint of its GLCs,
listed companies, and state-linked institutions.
Why Reform Is Crucial Now
First, Malaysia is at a
credibility crossroads. Although enforcement agencies have made strides in
tackling corruption and economic crime, public confidence in institutional
accountability remains fragile.
Legal reform that closes
loopholes in corporate criminal liability can help restore faith in the system
and signal a genuine commitment to good governance.
Second, the global enforcement
landscape is shifting. The creation of a new taskforce involving the UK,
France, and Switzerland aimed at prosecuting international financial crime shows
that enforcement is becoming more collaborative and less tolerant of inaction.
The U.S., traditionally a leader
in anti-corruption enforcement via the Foreign Corrupt Practices Act, has
slowed enforcement. This vacuum is being filled by European actors.
Malaysia, a regional economic
hub, risks reputational harm and legal isolation if it does not modernise its
approach.
Third, as ESG (environmental,
social and governance) accountability becomes mainstream, companies are being
judged not just by profitability but by compliance and integrity.
A modern liability regime that
deters wrongdoing by making corporations answerable for the actions of their
senior personnel aligns with this global shift.
This is especially pertinent
given Malaysia’s reliance on natural resources, extractive industries, and a growing
digital economy sector where regulatory breaches can have far-reaching effects.
Key Takeaways for Malaysian
Reform
Malaysia should consider key
corporate liability reforms, drawing from the UK’s legal framework. First, the
basis of liability should be broadened beyond bribery to encompass all serious
economic crimes, environmental offences, and regulatory breaches, ensuring
comprehensive accountability.
A ‘Senior Manager’ test should
also be introduced, holding companies liable for misconduct by individuals with
significant decision-making authority, even if they are not board members.
Additionally, the scope of
authority must be clarified to include “apparent authority,” preventing firms
from denying liability for criminal acts carried out in role-relevant contexts.
Malaysia should also enhance the
extraterritorial application of its laws, enabling prosecution of offences that
affect Malaysian interests, even when elements occur abroad.
Finally, to foster a culture of
prevention, Malaysia could adopt a mechanism similar to the UK’s Deferred
Prosecution Agreement regime, which encourages companies to implement robust
compliance programs and self-report misconduct in exchange for more flexible
enforcement.
These reforms would significantly
strengthen corporate accountability and regulatory integrity.
Conclusion
Corporate crime is no longer a
matter of isolated bad actors it reflects systemic failures in governance and
accountability.
The UK’s proposed expansion of
corporate criminal liability through the Crime and Policing Bill 2025 is not
just legal evolution it is a strategic move to meet the demands of modern,
cross-border corporate regulation.
Malaysia should not wait for the
next scandal to act. The moment for reform is now.
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https://focusmalaysia.my/uk-corporate-crime-reforms-lessons-for-malaysia/
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