UK publishes guidance on the new failure to prevent fraud offence, in force from September 2025
On 6 November 2024 the UK Government published guidance on the corporate offence of failure to prevent fraud, created by the Economic Crime and Corporate Transparency Act 2023. Large organisations can be criminally liable when an employee, agent or subsidiary commits fraud intended to benefit them, unless they had reasonable fraud prevention procedures. The offence took effect on 1 September 2025.
The Home Office published guidance on 6 November 2024 for the new corporate criminal offence of failure to prevent fraud, introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). Publication of the guidance set the clock running: the offence was to come into force on 1 September 2025.
What it means
- A large organisation can be criminally liable where an associated person commits a specified fraud offence intending to benefit the organisation. Associated persons include employees, agents and subsidiaries.
- Examples given include dishonest sales practices, hiding important information from consumers or investors, and dishonest practices in financial markets.
- The organisation's defence is to show it had reasonable fraud prevention procedures in place when the fraud happened.
- The offence applies to large organisations, broadly those meeting two of three tests: more than 250 employees, more than £36 million turnover, more than £18 million total assets. The size tests apply across the whole group.
Who is affected
Large companies and groups, including overseas groups with UK links, their boards, and the governance and compliance teams who run fraud risk assessments.
What to do
Run a fraud risk assessment, and review and document prevention procedures against the guidance's principles, including top-level commitment, proportionate procedures, due diligence, communication and monitoring.
Later developments
The offence came into force on 1 September 2025.