How Employers Can Prepare for the New Failure to Prevent Fraud Offence

Effective from 1 September 2025, the UK introduces a new corporate criminal offence: failure to prevent fraud. This measure, part of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), holds large organisations criminally liable if they benefit from fraud committed by employees, agents, subsidiaries, or other associated persons. To avoid liability, organisations must demonstrate they had reasonable fraud prevention procedures in place at the time of the offence. ​

Who Is Affected?

The offence applies to “large organisations” that meet at least two of the following criteria:​

• Turnover exceeding £36 million
• Total assets exceeding £18 million
• More than 250 employees​

This includes corporates and partnerships operating in the UK.

Key Employer Responsibilities

To mitigate the risk of liability, employers should:​

• Conduct a comprehensive fraud risk assessment: Identify potential fraud risks within the organisation.
• Implement and regularly review fraud prevention procedures: Ensure policies are up-to-date and effective.
• Update contracts and policies: Clearly outline expectations regarding fraud prevention.
• Establish disciplinary measures: Specify that failure to comply with fraud prevention policies may lead to dismissal.
• Provide training: Educate employees on fraud risks and prevention strategies.​

These steps align with the government’s guidance on reasonable procedures to prevent fraud.

Enforcement and Deferred Prosecution Agreements (DPAs)

The Serious Fraud Office (SFO) anticipates an increase in Deferred Prosecution Agreements (DPAs) under the new offence. DPAs allow companies to avoid prosecution by cooperating with investigations, paying fines, and implementing compliance measures. The SFO aims to conclude DPAs within six months of self-reporting, encouraging prompt disclosure of fraud.

Preparing for Compliance

Organisations should take proactive steps to ensure compliance:​

• Assess and enhance existing fraud prevention measures: Evaluate current policies and procedures.
• Engage legal counsel: Seek advice to align practices with the new legal requirements.
• Foster a culture of integrity: Promote ethical behaviour and accountability at all levels.​

By implementing these measures, organisations can demonstrate a commitment to preventing fraud and reduce the risk of liability under the new offence.​

Need Support Preparing for the New Offence?

If you would like to consult with our Corporate and Employment Law experts about how to prepare for the new Failure to Prevent Fraud offence, feel free to reach out. At mlplaw, we can help you assess your risk, update your policies and put robust prevention procedures in place.