As part of the Economic Crime and Corporate Transparency Act (ECCT), a new guidance document has been released aimed at aiding organisations in adhering to the corporate criminal offence of ‘failure to prevent fraud’.
Introduced in the previous year, this offence is designed to hold large organisations accountable if they benefit financially from fraudulent activities committed by employees, agents, subsidiaries, or other associated persons.
Examples highlighted within the guidance include dishonest sales practices and misleading financial market operations. These scenarios underscore the critical areas where organisations must focus to prevent deception that could lead to serious legal repercussions.
From September 2025, when this offence is formally enacted, companies found guilty of fraud will need to demonstrate to courts that they had effective fraud prevention strategies in place at the time the fraud occurred.
Developed collaboratively by several key agencies including the Crown Prosecution Service (CPS), Serious Fraud Office (SFO), and Financial Conduct Authority (FCA), among others, the guidance represents a proactive approach to cultivating an anti-fraud corporate culture. This shift is reflective of the changes brought about by the ‘failure to prevent bribery’ legislation enacted in 2010, which significantly reshaped corporate accountability and ethical standards.
With fraud constituting approximately 40% of all crime in England and Wales, these measures form part of a broader governmental strategy to curb fraud and enhance protection for businesses and the general public against the most prevalent crime type in the UK.
Lord David Hanson, Minister with Responsibility for Fraud, expressed his commitment to eradicating fraud, emphasising that the new guidance paves the way for necessary changes in corporate behaviour towards fraud prevention. Nick Ephgrave QPM, Director of the Serious Fraud Office, echoed this sentiment, noting the severe impact of corporate fraud on public trust and financial stability in the UK. He stressed the urgency for companies to align their internal practices with the new regulations to avoid criminal investigations.
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