New measures to tackle fraud come into effect

New corporate criminal offence of 'failure to prevent fraud' will hold large organisations to account if they profit from fraud.

Businesses will benefit from a new corporate criminal offence of ‘failure to prevent fraud’, designed to drive an anti-fraud culture and improve business confidence.

Introduced as part of the Economic Crime and Corporate Transparency Act (ECCT) 2023, the offence, which comes into effect today (Monday 1 September), will hold large organisations to account if they profit from fraud. It forms part of wider measures introduced by the government to tackle fraud and protect the UK economy, as part of the Plan for Change.

The offence of ‘failure to prevent fraud’ follows major steps forward on fraud prevention including:

Under the new law, which was passed with cross-Parliament support, large organisations can be held criminally liable where an employee, agent, subsidiary, or other ‘associated person’ commits a fraud intending to benefit the organisation. 

In the event of prosecution, an organisation will now have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time 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. 

Throughout the implementation period, businesses have been supported with guidance advising on the new offence, ensuring they take action to prevent fraud.