Context
A new criminal offence of failing to prevent fraud is to be added to UK law and applied to large businesses and other large organisations.
Key points to note
A new offence of failing to prevent fraud is to be introduced via the Economic Crime and Corporate Transparency Bill that is currently progressing through the House of Lords. The move comes at a time when fraud has been calculated to account for 41% of all recorded crimes in the UK.
“These proposals will level the playing field for businesses that already take fraud prevention seriously, by penalising unscrupulous operators,” the Home Office said in a factsheet. “Businesses, including small and medium enterprises (SMEs), are often the victims of fraud by other corporations and will benefit from greater protection.”
“The offence has been designed to drive change and facilitate prosecutions without duplicating existing legislation or policy or placing unnecessary burden on legitimate business. For example, the offence will only apply to large companies, to avoid disproportionate burdens on SMEs and support economic growth. We have streamlined the offence by limiting it to fraud and false accounting, keeping money laundering responsibilities contained under the existing regulatory regime. Government will be under a statutory duty to publish guidance to set out what would be considered reasonable fraud prevention procedures, clarifying the expectations on business,” it said.
“Large organisations” from across UK sectors would be within scope of the new offence. An organisation would be considered large for the purposes of the new offence if it satisfies at least two of three listed conditions:
- its annual turnover is more than £36 million;
- its balance sheet worth is more than £18m;
- it has more than 250 employees.
Next actions
None – for information and awareness.