On 6 November 2024, gov.uk published guidance to provide organisations with important advice on the new corporate criminal offence of ‘failure to prevent fraud’.
Introduced last year as part of the Economic Crime and Corporate Transparency Act, the offence is intended to hold large organisations to account if they profit from fraud.
In the event of a prosecution, an organisation would have to demonstrate that it had reasonable fraud prevention measures in place at the time the fraud was committed. The offence is intended to encourage organisations to build an anti-fraud culture.
The comprehensive Home Office guidance includes an overview of the offence – which organisations are in scope and the defence of reasonable fraud prevention measures, and reasonable fraud prevention procedures which are informed by six principles:
- Top level commitment
- Risk assessment
- Proportionate risk-based fraud prevention procedures
- Due diligence
- Communication
- Monitoring and review
Failure to prevent fraud will come into force on 1 September 2025.
Public sector organisations are already required to implement the recommendations of the Public Sector Fraud Authority and the Government Counter Fraud Profession, and are therefore likely to have many of the elements of fraud prevention in place. However, they should adapt their procedures to take into account the new offence.
For more information and to access the guidance:
New failure to prevent fraud guidance published – GOV.UK
Offence of ‘failure to prevent fraud’ introduced by ECCTA – GOV.UK
Action Required
Audit Committees and Boards to note the guidance and ensure action is being taken to prevent fraud within the organisation.