Failure to Prevent Fraud Offence – Are You Ready?

On 1st September 2025, a new and important provision of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) will come into force – the “Failure to Prevent Fraud” offence. Katy Worobec and Toni Sless, Fraud Specialists at AJC, explain the key implications for businesses and how to prepare.

The introduction of the “Failure to Prevent Fraud” offence marks a significant shift in corporate accountability, mandating that large organisations must proactively introduce measures to prevent fraud from being committed by associated individuals for the benefit of the organisation. [1]

The “Failure to Prevent Fraud” offence holds large organisations criminally liable if: [2]

• An employee, agent, subsidiary, or other associated person commits a specified fraud offence intending to benefit the organisation.
• The organisation did not have reasonable procedures in place to prevent such fraud. [3]

An important point to note is that it is not necessary to prove that senior management were aware of or involved in the fraudulent activity. The offence is applicable to large incorporated bodies, subsidiaries, partnerships, and certain non-profit and public organisations. Police forces and government departments are excluded from the scope.

Is Your Organisation in Scope?

Organisations meeting at least two of the following criteria will need to comply with the requirements of the Act:

• More than £36m turnover;
• More than £18m in total assets; and
• More than 250 employees.

Implications for Your Business

Organisations that fail to implement adequate fraud prevention measures risk criminal liability, which can lead to substantial fines and reputational damage. The offence covers many fraudulent activities, including fraudulent trading, false accounting, and cheating the public revenue.

The legislation has a broad scope, meaning even foreign companies can be prosecuted if the fraudulent activity has a UK link – for example, involving UK victims or operations. [4]

Preparing for Compliance

In order for businesses to comply with the new offence, it is important to implement a strategic, organisation-wide approach to fraud prevention. This must start at the top. Leadership must demonstrate a clear commitment to ethical conduct and actively promote an anti-fraud culture. This includes setting expectations across the organisation and ensuring anti-fraud policies are well communicated and properly resourced.

Thorough risk assessment is essential for compliance with the new offence. Organisations need to understand where and how they are vulnerable to fraud, whether through internal processes, third-party relationships, or evolving operational models. Once risks are identified, tailored procedures should be implemented that are proportionate to the business. This could include tightening financial controls, strengthening approval workflows, or enhancing oversight in high-risk areas.

Due diligence is critical, particularly when engaging employees, contractors, or agents who may represent the company externally. Ensuring these individuals share the organisation’s ethical standards is vital in preventing fraud from occurring in the first place.

Just as important is ensuring that staff are aware of the risks and how they should respond. Regular training and open communication channels help to embed a fraud-conscious culture throughout the business, while encouraging early reporting of suspicious activities. As with any other compliance measure, it is important to continuously monitor and regularly review prevention procedures to ensure they remain effective and can adapt to new threats or operational changes. [5]

Being prepared means more than just having policies in place. It means making fraud prevention an integral part of everyday business operations. Taking these steps now will not only help your business avoid liability, but will also strengthen organisational resilience and trust in the long term.

Final Thoughts

The introduction of the “Failure to Prevent Fraud” offence reflects a wider shift in expectations around corporate responsibility. It is no longer enough for organisations to react to incidents of fraud, they must demonstrate that proactive, proportionate measures are in place to prevent it from occurring in the first place.

With the offence coming into force in September 2025, now is the time for businesses to take stock, assess their risks, and ensure they have the right policies, procedures, and culture in place. Taking action early will not only support compliance but also strengthen trust with stakeholders, regulators, and customers alike.

How AJC Can Help

At AJC, we bring extensive experience in fraud prevention, compliance, and risk management. Our team includes leading specialists who have worked at the forefront of economic crime policy, regulation, and enforcement.

We support organisations across sectors to:

• Assess fraud risks and identify vulnerabilities
  
• Develop and implement proportionate and effective fraud prevention procedures
  
• Embed ethical standards and an anti-fraud culture across all levels of the business
  
• Deliver practical training that raises awareness and strengthens response readiness
  
• Design robust governance and oversight frameworks to meet evolving regulatory requirements

Whether you’re taking first steps towards compliance or reviewing existing measures, AJC can help you build a tailored, strategic approach that reduces your risk exposure and supports long-term resilience.

Contact us on 020 7101 4861 or email us at info@ajollyconsulting.co.uk if you think we can help.

References

1. Offence of ‘failure to prevent fraud’ introduced by ECCTA. (2024, November 6). Retrieved from UK Government: https://www.gov.uk/government/publications/offence-of-failure-to-prevent-fraud-introduced-by-eccta

2. Extension of corporate criminal liability in the United Kingdom. (2025, May 28). Retrieved from Reuters: https://www.reuters.com/legal/legalindustry/extension-corporate-criminal-liability-united-kingdom-2025-05-28/

3. Everything You Need to Know About the New ‘Failure to Prevent Fraud’ Offence. (2025, May 29). Retrieved from EM Law: https://emlaw.co.uk/everything-you-need-to-know-about-the-new-failure-to-prevent-fraud-offence/

4. Failure to prevent fraud: key points from the Government Guidance. (2025, January 9). Retrieved from Stephenson Harwood: https://www.stephensonharwood.com/insights/failure-to-prevent-fraud-key-points-from-the-government-guidance

5. Failure to prevent fraud (and beyond): essential steps. (2025, March). Retrieved from Governance and Compliance Magazine: https://www.govcompmag.com/2025/03/26/failure-prevent-fraud-and-beyond-essential-steps