"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."
- Lord David Hanson, minister with Responsibility for Fraud
The government has published new guidance to provide organisations with 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, which comes into force on 1st September 2025, is intended to encourage organisations to build an anti-fraud culture.
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).
Fraud is the most common crime type in the UK, amounting to around 40% of all crime in England and Wales.
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, commented: "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."
Andrew Reeves, partner at Norton Rose Fulbright, added: "This is a game-changing offence, which will have a similar impact to the UK Bribery Act. It will drive significant changes in compliance and culture, and lead to Deferred Prosecution Agreements, as well as prosecutions."
