UK Economic Crime and Corporate Transparency Act 2023 - Failure to prevent fraud: Storm in a tea cup?

February 2025Compliance General

Abstract

The Failure to Prevent Fraud offence contained within the UK Economic Crime and Corporate Transparency Act 2023 (ECCTA) finally comes into effect on 1 September 2025 following the release of long-awaited guidance by the UK government on 6 November 2024. This new offence holds organisations liable for fraud committed by those considered to be in its charge (including employees, agents, subsidiaries or associated persons) unless it can demonstrate that it had ‘reasonable procedures’ in place to prevent fraud. The fraud prevention framework issued as part of the UK government’s guidance put forward six principles that it considers should inform organisations on what reasonable procedures might look like. In turn, this has given rise to a mini-industry of scare stories and impractical suggestions around what companies need to do next – at a scale that has not been seen since the introduction of the Bribery Act in 2010. This article explores the (relatively limited) impact the Failure to Prevent Fraud offence (FTP) in ECCTA really should have on most companies and sets out tips on how in-house counsel can guide management to make pragmatic, proportionate decisions on what to do next.

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UK Economic Crime and Corporate Transparency Act 2023 - Failure to prevent fraud: Storm in a tea cup?

Abstract

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