Guidance published by the UK government 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 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.
Failure to prevent fraud will come into force on 1 September 2025.
For further information please select the following link: Offence of 'failure to prevent fraud' introduced by ECCTA - GOV.UK