Corporate Failure to Prevent Fraud
The new corporate ‘Failure to Prevent Fraud’ offence under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) will come into effect on 1 September 2025. This impacts UK and non-UK based organisations (where there is a link to the UK) and represents a significant expansion of corporate criminal liability. General Counsel, Chief Legal Officers and senior compliance professionals should be taking steps now to assess risk exposure and readiness.
Offence and defence
Comparable to Corporate Failure to Prevent offences under the UK Bribery Act 2010 (UKBA) and Criminal Finances Act 2017 (CFA), a “large organisation” commits an offence if an associated person (employee, agent, subsidiary, etc.) commits a specified fraud offence for the organisation’s benefit. This is a strict liability offence and there is no need to prove senior management knowledge or involvement. Organisations face punitive financial penalties and reputational damage if the offence is proven. The only defence is to demonstrate “reasonable prevention procedures”.
Who is caught?
The offence applies to companies, partnerships and LLPs meeting two of the following:
- £36 million+ turnover
- £18 million+ balance sheet
- 250+ employees
This includes UK subsidiaries of overseas parent entities.
Download our brochure to understand the relevant considerations, government guidance, and how we can help with proactive prevention support before reactive defence services are necessary.
