Mat says: 26 DEC 2025 - Why Senior Manager Liability Demands Urgent Action

Briefing and Warning: ECCTA Senior Manager Attribution Reform (Section 196 ECCTA 2023)

Introduction

• The Economic Crime and Corporate Transparency Act 2023 (ECCTA), effective for offences committed on or after 26 December 2023, introduces
• A transformative reform through Section 196, and
• Establishes the SENIOR MANAGER ATTRIBUTION model for corporate criminal liability in the UK.
• This reform, detailed in the joint Corporate Prosecutions Guidance (CPS and SFO, 18 August 2025), significantly broadens the scope of corporate accountability for economic crimes listed in Schedule 12 such as
• Fraud (e.g., fraud by false representation, fraud by abuse of position)
• Bribery (e.g., under the Bribery Act 2010)
• Money laundering (e.g., under the Proceeds of Crime Act 2002)
• Sanctions breaches (e.g., under the Sanctions and Anti-Money Laundering Act 2018)
• Other offences like theft and false accounting
• By attributing liability to corporations for offences committed by senior managers acting within their authority,
• It addresses the limitations of the restrictive "identification doctrine,"
• Which confined liability to the "directing mind and will" (e.g., board-level executives).

This MAT SAYS briefing outlines the reform’s scope, implications, and risks, issuing a warning to corporations to strengthen compliance measures urgently.

Scope of Senior Manager Attribution (Section 196 ECCTA 2023)

• Covered Offences: Applies to economic crimes listed in Schedule 12, including:
• Fraud (e.g., fraud by false representation, fraud by abuse of position)
• Bribery (e.g., under the Bribery Act 2010)
• Money laundering (e.g., under the Proceeds of Crime Act 2002)
• Sanctions breaches (e.g., under the Sanctions and Anti-Money Laundering Act 2018)
• Other offences like theft and false accounting
• Who is a Senior Manager?: Defined as individuals who play a significant role in:
• Decision-making about the whole or a substantial part of the organisation’s activities, or
• Managing or organising those activities. This includes roles like regional directors, heads of major departments, or senior compliance officers, extending beyond the board-level figures required under the identification doctrine.
• Authority Requirement: The senior manager must act within their actual or apparent authority when committing the offence for liability to attach to the corporation.
• Effective Date: Applies to offences committed on or after 26 December 2023.
• Extraterritorial Reach: Covers conduct abroad if the offence is prosecutable in the UK, subject to jurisdictional limits.
• No Statutory Defence: Unlike "failure to prevent" offences (e.g., Section 199 ECCTA), there is no defence based on reasonable prevention procedures, making liability direct once a senior manager’s offence is proven.

Addressing Limitations of the Identification Doctrine

The identification doctrine, as seen in cases like R v Barclays Bank Plc (2018-2020), limited corporate liability to acts of the "directing mind and will" (e.g., board members), often failing in large, decentralised organisations where even C-suite executives (e.g., CEO, CFO) were not deemed senior enough. Section 196 overcomes these limitations by:

• Broader Attribution: Extends liability to a wider range of senior managers, capturing those with significant but not necessarily board-level authority.
• Simplified Prosecution: Removes the need to prove a single "directing mind," aligning closer to broader models like the U.S. respondeat superior (though scoped to economic crimes).
• Complex Organisations: Accounts for decentralised structures by including mid-tier managers, addressing failures in cases like Barclays, where the SFO could not prosecute due to the doctrine’s narrowness.

Implications for Corporations

The reform significantly increases corporate exposure to criminal liability:

• Heightened Risk: Corporations face liability for actions of a larger pool of senior managers, not just top executives, across a wide range of economic crimes.
• Direct Accountability: Without a statutory defence, liability hinges solely on proving the senior manager’s offence, increasing prosecutorial success rates.
• Extraterritorial Exposure: Global operations are at risk if senior managers abroad commit Schedule 12 offences prosecutable in the UK.
• Reputational and Financial Impact: Convictions may lead to fines, director disqualifications, serious crime prevention orders, and reputational damage, with asset recovery measures (e.g., restraint orders) further impacting finances.

Warning to Corporations

Urgent Action Required: The introduction of Section 196, practical since 26 December 2023, represents a seismic shift in corporate criminal liability. SFO Director Nick Ephgrave’s statement,

• “Now is the time to take action. Corporations must get their house in order,” underscores the urgency for compliance.

Corporations, especially those operating in high-risk sectors (e.g., finance, trade), must:

• Conduct Compliance Reviews: Audit and strengthen governance to identify and monitor senior managers’ roles and authority, ensuring oversight of decision-making processes.
• Implement Robust Controls: Develop policies to prevent economic crimes, including training on fraud, bribery, and money laundering for senior managers.
• Enhance Due Diligence: Regularly assess senior managers’ activities, particularly in international operations, to mitigate extraterritorial risks.
• Prepare for Prosecution Risks: Without a reasonable procedures defence, proactive self-reporting and cooperation (e.g., via Deferred Prosecution Agreements) may mitigate penalties.
• Engage Legal Expertise: Consult specialists to align with the updated CPS/SFO guidance and navigate the broader liability landscape.

Failure to act risks severe consequences, including criminal prosecution, financial penalties, and long-term reputational harm, particularly as the SFO and CPS prioritise enforcement of economic crimes under ECCTA.

Illustrative Example

Hypothetical Case:

• A regional director at a UK-based financial firm authorises fraudulent misrepresentations to inflate client investments (a Schedule 12 offence).
• Pre-ECCTA, the identification doctrine might fail if the director isn’t deemed the "directing mind" (e.g., Barclays).
• Under Section 196, the firm faces liability as the director qualifies as a senior manager, enabling prosecution without board-level involvement.
• This demonstrates the reform’s broader reach and increased prosecutorial ease.

Conclusion

• Section 196 ECCTA 2023 revolutionises corporate criminal liability by expanding attribution to senior managers for Schedule 12 economic crimes, overcoming the identification doctrine’s restrictive scope.
• Effective since 26 December 2023, it demands immediate corporate action to strengthen compliance and mitigate risks.
• Corporations must prioritise governance reforms to avoid prosecution, fines, and reputational damage in this new era of heightened accountability.

Sources

• UK Government, Joint SFO-CPS Corporate Prosecution Guidance, 18 August 2025: https://www.gov.uk/government/publications/joint-sfo-cps-corporate-prosecution-guidance/joint-sfo-cps-corporate-prosecution-guidance
• JD Supra, “CPS and SFO publish joint corporate prosecutions guidance”: https://www.jdsupra.com/legalnews/cps-and-sfo-publish-joint-corporate-5579964/
• White & Case, “UK Economic Crime Reforms: The Expansion of Corporate Criminal Liability,” 14 April 2025: https://www.whitecase.com/insight-alert/uk-economic-crime-reforms-expansion-corporate-criminal-liability
• Wilmer Hale, “Economic Crime and Corporate Transparency Act 2023: The expansion of the identification principle,” 21 March 2024: https://www.wilmerhale.com/insights/client-alerts/20240321-economic-crime-and-corporate-transparency-act-2023-the-expansion-of-the-identification-principle