New Law Takes Effect 1 September

Large organisations in the UK face criminal liability from today by failing to prevent fraud committed for their benefit by employees, agents, subsidiaries, or other associated persons.

Introduced under the Economic Crime and Corporate Transparency Act 2023 (ECCTA), the new “failure to prevent fraud” offence marks a fundamental shift in corporate accountability. It removes the need to prove senior management complicity and instead places the burden on organisations to demonstrate they had reasonable procedures in place to prevent fraudulent conduct.

Organisations that meet two or more of the following criteria will be in scope:

• Over 250 employees
• Annual turnover exceeding £36 million
• Total assets over £18 million

Failure to comply could result in unlimited fines, reputational damage, and criminal investigation by the Serious Fraud Office (SFO) or Crown Prosecution Service (CPS).

Expert Opinion

“The introduction on 1 September 2025 of the new failure to prevent fraud offence under ECCTA will have a significant impact on organisations and their risk exposure.

“Whether the procedures are deemed to be sufficient will be a matter for the Court to establish, and until we start to see the outcome of prosecutions this is somewhat of a watching brief.

“However, as the primary aim of the new offence is to place additional responsibility and accountability on large organisations, corporates should be undertaking reviews and audits of their policies and procedures to prevent fraud and indeed other misconduct.” Colette Kelly, Partner in the Regulatory and Criminal Group at Irwin Mitchell

Businesses are urged to act now—review fraud risk assessments, update internal controls, and ensure staff and third parties are trained and aware of whistleblowing procedures.

A more detailed article about the changes can be viewed here.