Organisations must prepare now for new fraud prevention law
Large organisations across England and Wales need to finalise preparations for a new fraud prevention law that comes into force on 1 September 2025.
The reminder comes as the Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO) today published joint updated guidance for prosecutors around dealing with corporate prosecutions.
The new "failure to prevent fraud" offence will make large organisations legally responsible for preventing fraud committed by their employees and other associated persons. This means businesses, charities and other organisations could face prosecution if they don't have proper fraud prevention procedures in place, which will in turn encourage better corporate behaviour.
The Home Office last year published advice to help organisations understand what they need to do to prepare for the new law. This includes putting in place systems and training to prevent fraud happening in the first place.
The updated guidance to prosecutors also covers changes to the ‘identification doctrine’ already in force under the Economic Crime and Corporate Transparency Act 2023, which introduced a broader definition of who could be considered responsible for a company's actions.
These changes make it easier to hold organisations to account legally for economic crimes committed by senior managers.
Hannah von Dadelszen, Chief Crown Prosecutor leading on economic crime for the CPS, said: "The new ‘failure to prevent fraud’ offence and developments in the identification doctrine represent a major step forward in tackling corporate crime.
“Together, they remove barriers that have made it harder to hold companies to account, and our updated guidance equips prosecutors to make full use of these changes.
“Preventing fraud is essential to protecting the public and our economy. The public are entitled to have confidence that companies will be held to account for wrongdoing.
“Large companies, charities and other organisations need to act now to make sure they have proper fraud prevention systems in place.”
Nick Ephgrave, Director of the Serious Fraud Office said: “This updated guidance, published by the SFO and CPS, will help prepare prosecutors to pursue corporations which are failing to comply with their responsibilities under the law.
“Now is the time to take action. Corporations must get their house in order or be ready to face investigation.”
Security Minister Dan Jarvis said: “Fraud is a disgraceful crime, and we are determined to provide the highest level of protection for the public.
“The new ‘failure to prevent fraud’ offence means those without proper fraud prevention procedures in place will face severe consequences.”
The change in the law came following the Law Commission’s review of corporate criminal liability. The CPS and SFO worked closely with other parts of Government to call for an expansion of the existing ‘failure to prevent’ law to wider economic crime.
The CPS and SFO encourage organisations to report fraud when they discover it. Organisations that self-report fraud demonstrate their commitment to responsible corporate governance.
Self-reports can be made to the Serious Fraud Office, regulators such as the Financial Conduct Authority, or local police forces.
Notes to editors
- Hannah von Dadelszen is the Chief Crown Prosecutor, leading on economic crime within the CPS Serious Economic, Organised Crime & International Directorate
- The full CPS and SFO joint Corporate Prosecutions Guidance is available here: Corporate Prosecutions | The Crown Prosecution Service
- Home Office guidance to large organisations was published last year and is available here: Offence of 'failure to prevent fraud' introduced by ECCTA - GOV.UK
Q&A about ‘Failure to prevent fraud’:
What is the 'failure to prevent fraud' offence?
A new corporate criminal offence created by the Economic Crime and Corporate Transparency Act 2023 makes large organisations criminally liable if they fail to prevent fraud committed by an employee or agent for the organisation's benefit.
When does the new offence come into force?
1 September 2025.
Which organisations does it apply to?
Large organisations, defined as those meeting at least two of the following criteria:
- More than 250 employees
- Annual turnover exceeding £36 million
- Balance sheet total exceeding £18 million
What penalties can organisations face?
Unlimited fines if convicted.
Is there a defence available?
Yes, organisations can defend themselves by demonstrating they had reasonable fraud prevention procedures in place, or that it was not reasonable in the circumstances to expect such procedures.