Failure to Prevent Fraud Offence Lands

On 1st September 2025, the “Failure to Prevent Fraud” offence – an important provision of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) – came into force. Katy Worobec and Toni Sless, Fraud Specialists at AJC, explain why it’s so important you should ensure your business is match ready. 

The “Failure to Prevent Fraud” offence means that all organisations in the scope of the Act must pro-actively introduce measures to prevent fraud from being committed by associated individuals for the benefit of the organisation. [1] 

The “Failure to Prevent Fraud” offence means relevant organisations are now 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] 

The offence applies to 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? 

If your organisation meets at least two of the following criteria it will now 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 

If your organisation fails to implement adequate fraud prevention measures it risks criminal liability, which could mean 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] 

Ensuring Compliance 

To ensure your business complies with the new offence you need to implement a strategic, organisation-wide approach to fraud prevention starting from the top-down. Leaders 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. 

A thorough risk assessment is an essential starting place. You need to understand where and how your organisation is vulnerable to fraud, whether that be via internal processes, third-party relationships, or evolving operational models. Once you have clarity about the risks you may face, you can implement processes that are tailored and proportionate to the business – for example tightening financial controls, strengthening approval workflows, or enhancing oversight in high-risk areas. 

Due diligence is vital. Employees, contractors, or agents who may represent the company externally should all share the organisation’s ethical standards if you want to prevent fraud. 

Your staff need to understand the risks and how they should respond, so implement regular fraud awareness training and open communication channels to help embed a fraud-conscious culture throughout the business, also encouraging early reporting of suspicious activities. It is important that you continuously monitor and review prevention processes to ensure they remain effective and can adapt to new threats or operational changes. [5] 

This is not just about having policies in place. Fraud prevention has to become an integral part of everyday business operations. Taking these steps will help your business avoid liability and 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 a call to action. It is not enough for your organisation to be reactive, it must demonstrate that proactive, proportionate measures are in place to prevent fraud from occurring in the first place. 

How AJC Can Help 

If you have not yet completed your preparations for compliance with the new offence and would like expert advice to augment your own resources without increasing headcount, the Fraud Risk Management team at AJC can help you.   We have 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 work with you to build a practical, tailored fraud strategy 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.

Sources

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