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Criminal and civil law

There are many laws and regulations relating to finance aimed at preventing criminal use of an organisation’s assets. Sign up to find out more!
A stack of law books stands in front of a justice scale that is slightly out of focus. On top of the stack is an open law book.

There are two broad areas of law which apply to different types of misconduct. These are criminal law and civil law.

Criminal law

Criminal law is made up of individual rules which prohibit certain conduct harmful to society as a whole. Examples of criminal conduct include murder and theft, but also financial crimes such as money laundering. Under criminal law, offences are prosecuted by the state. Most criminal laws apply to individuals only, and not to companies.

Individual directors and other company officers can be prosecuted for criminal offences committed while at work, e.g. knowingly manipulating financial markets.

Standard of proof

Under UK criminal law the burden of proving that a wrong has been done rests with the prosecution, which must prove its case beyond reasonable doubt.

Penalties

The consequence of breaking a criminal law is a punishment, e.g. a fine or imprisonment.

Civil law

Civil law regulates disputes over the rights and obligations of private individuals or companies dealing with each other, e.g. disputes concerning a loan agreement would fall within the civil law.

Standard of proof

Where civil law cases go to court the case must be proved on a balance of probabilities. The person bringing the case is usually called the claimant and the person against whom the case is made is usually called the defendant. It is for the claimant to satisfy the court that the case is proved on the balance of probabilities.

The most usual consequence of a successful civil law case is a legal order for the defendant to pay compensation to the injured party, or claimant.

Financial offences

There are many laws and regulations that relate to finance. These are primarily aimed at preventing criminal or improper use of an organisation’s assets, and at preventing unfair business practices.

Being in breach of these or other laws and regulations could result in serious adverse consequences for the continuation of a company. At the very least the company could have to pay out large sums in compensation or fines, and in certain circumstances it could be ordered to cease trading.

Reputational loss

Adverse consequences, such as loss of business, could arise from a damaged reputation, e.g. as a result of adverse publicity. In 2014, for instance, former employees of Barclays Bank faced criminal prosecution for alleged offences while they were employees of the bank. This damaged the bank’s reputation.

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