Failure to Prevent Fraud - New Corporate Offence from 1st September 2025

A new corporate offence 'failure to prevent fraud', will come into force on 1 September 2025 under the Economic Crime and Corporate Transparency Act. This marks a significant shift in UK legislation, meaning large organisations can be held criminally liable if a person associated with the business commits a specified fraud offence intending to benefit the organisation or its clients.

The offence applies to organisations meeting at least two of the following criteria:

• More than 250 employees
• More than £36 million turnover
• More than £18 million in assets

Small and medium sized businesses will be exempt, but can be scrutinised under other fraud and corporate liability laws. To protect your business and comply, you must:

• Assess fraud risk across all departments.
• Implement reasonable procedures to prevent fraud. These should be tailored to your business and proportionate to the risk.
• Train staff on recognising and reporting fraudulent activities.
• Monitor and update internal controls regularly.

If you fail to comply, your business could be faced with unlimited fines, along with reputational damage and further scrutiny.