New failure to prevent fraud guidance published
New corporate criminal offence will hold large organisations to account if they profit from fraud.
Today we’ve published guidance that will provide organisations with important advice on the new corporate criminal offence of ‘failure to prevent fraud’, helping make sure they are taking action to prevent fraud.
Introduced last year as part of the Economic Crime and Corporate Transparency Act (ECCT), the offence is intended to hold large organisations to account if they profit from fraud.
Under the offence, which has cross-Parliament support, large organisations may be held criminally liable where an employee, agent, subsidiary, or other “associated person”, commits a fraud intending to benefit the organisation.
Examples may include dishonest sales practices, the hiding of important information from consumers or investors, or dishonest practices in financial markets.
In the event of prosecution, an organisation would have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time that the fraud was committed.
The offence is intended to encourage organisations to build an anti-fraud culture, in the same way that failure to prevent bribery legislation has helped reshape corporate culture since its introduction in 2010.
The guidance has been developed with input from the Crown Prosecution Service (CPS), Serious Fraud Office (SFO), HM Treasury, HMRC, Ministry of Justice, Cabinet Office, Attorney General’s Office and Financial Conduct Authority (FCA).
Failure to prevent fraud will come into force on 1 September 2025.
With fraud being the most common crime type in the UK, amounting to around 40% of all crime in England and Wales, these new measures are part of a wider government ambition to reduce fraud and protect potential victims, including business victims.
Lord David Hanson, Minister with Responsibility for Fraud, said:
Fraud is a pernicious crime, and we are determined to root it out wherever it takes place. This guidance marks the first steps towards a corporate culture shift around fraud prevention.
I look forward to continuing our work with partners in industry and law enforcement to better protect the public and businesses from this appalling crime and bring these callous criminals to justice.
Nick Ephgrave QPM, Director of the Serious Fraud Office (SFO), said:
Corporate fraud significantly damages confidence in UK companies and ultimately costs the taxpayer.
The publication of this guidance means that time is running short for corporations to get their house in order or face criminal investigation.