UK Failure to Prevent Fraud Offence Comes Into Force for Large Organisations

The Home Office said the offence is designed to drive an anti-fraud culture in the same way that the failure to prevent bribery offence has shaped corporate behaviour since 2010. It gave dishonest sales practices, hiding important information from consumers or investors and dishonest practices in financial markets as examples of conduct that could be caught.

Who is affected

The offence applies only to large organisations, meaning bodies corporate and partnerships that meet at least two of three tests in the financial year before the fraud: more than 250 employees, turnover of more than £36 million and total assets of more than £18 million. The tests are applied across the whole group, including subsidiaries. Overseas organisations can be caught where the fraud has a UK connection, for example where it targets victims in the UK or part of the conduct takes place here.

The reasonable procedures defence

It is a defence for an organisation to prove that it had reasonable fraud prevention procedures in place when the fraud was committed, or that it was not reasonable to expect it to have any. Statutory guidance on what reasonable procedures look like was published on 6 November 2024, ahead of the offence coming into force on 1 September 2025. The guidance is built around six principles: top-level commitment, risk assessment, proportionate risk-based prevention procedures, due diligence, communication and training, and monitoring and review. A conviction can lead to an unlimited fine.

What happens next

The Serious Fraud Office and the Crown Prosecution Service have both said they are ready to use the new offence. Organisations in scope should be able to show a documented fraud risk assessment and procedures that respond to it, together with evidence that they are monitored. The government has also said that a new, expanded fraud strategy, with fraud against business at its centre, is being prepared.

Sources

• GOV.UK: New measures to tackle fraud come into effect
• legislation.gov.uk: Economic Crime and Corporate Transparency Act 2023, section 199
• GOV.UK: New failure to prevent fraud guidance published