Glossary term
Criminal Penalty
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Criminal sanction
A criminal penalty is a punishment imposed by a criminal court after conviction for an offence, such as imprisonment, a fine, confiscation of proceeds or a ban from holding certain roles.
Explanation
Criminal cases are brought by the state, through prosecutors, and the accused is presumed innocent until the prosecution proves guilt beyond reasonable doubt. For most serious offences this includes showing a guilty state of mind, though some offences are strict liability. Companies can be convicted in many legal systems and punished by fines, confiscation of proceeds, bans from public contracts, or probation conditions. Individuals may face prison. Convictions also carry lasting effects, such as loss of professional licences or debarment. Because the standard of proof is high and trials are long, the criminal route is reserved for the most serious misconduct: fraud, bribery, money laundering and deliberate market abuse. Prison is a sanction that fines on the company cannot replace, which is why prosecutors pursue individuals alongside firms.
Example
A finance director knowingly inflates revenue to hit a bonus target and hides the false figures from the auditors. After a prosecution, a court finds him guilty of fraud and sentences him to a term in prison. The company is separately fined.
Not to be confused with
- Civil Penalty
- Civil penalties are financial and need a lower standard of proof. Criminal penalties follow a conviction and can include prison.