FAILURE TO PREVENT FRAUD: THE FINAL COUNTDOWN
The introduction of the failure to prevent fraud (FTPF) offence under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) marks one of the most significant developments in corporate criminal liability in decades. With the offence set to come into force on 1 September 2025, large organisations will soon face direct liability if fraud is committed by someone acting on their behalf, unless they can demonstrate the existence of ‘reasonable procedures’ to prevent it.
This development places a new compliance burden on large businesses, aligning with the government’s broader strategy to make the UK a more hostile environment for economic crime. It also reinforces a growing legal trend toward proactive prevention of financial misconduct, building on similar offences under the Bribery Act 2010 and the Criminal Finances Act 2017.
Scope and structure of the offence
Under section 199 of ECCTA, a relevant body commits an offence of FTPF if a person associated with that relevant body commits a listed fraud offence, intending to benefit the relevant body or a subsidiary of it.
A relevant body is defined as a ‘large organisation’, which must meet at least two of the following three thresholds: (i) more than £36m in turnover; (ii) more than £18m in total assets; or (iii) more than 250 employees.
Jul-Sep 2025 issue
Greenberg Traurig, LLP