Context
In November 2024 the Home Office published a 46-page Guidance Note on the new corporate offence of failure to prevent fraud, which was introduced under the Economic Crime and Corporate Transparency Act 2023. This new fraud prevention law comes into force on 1st September 2025. The CPS has published a reminder about preparing for the incoming law, as it has, in conjunction with the Serious Fraud Office (SFO), also published joint updated guidance for prosecutors around dealing with corporate prosecutions. In essence, the offence is to fail to prevent fraud committed by an employee or agent for the organisation’s benefit.
Key points to note and next actions
- The new “failure to prevent fraud” offence will make large organisations legally responsible for preventing fraud committed by their employees and other associated persons.
- ‘Large organisations’ are those 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
- Although many of our clients will not meet two of these three criteria, it may be useful for insurance brokers dealing with larger corporate clients to remind those clients to be aware of the new risks that this new law will bring.
- A defence is available in relation to the new offence by demonstrating that an organisation had reasonable fraud prevention procedures in place, or that it was not reasonable in the circumstances to expect the organisation to have any prevention procedures in place.