ENGLAND & WALES Trends and Developments Contributed by: John Kaye and Piers Desser, Carson Kaye
Carson Kaye 14 Bowling Green Lane Clerkenwell London EC1R 0BD UK Tel: +44 208 075 4147
Email: info@carsonkaye.co.uk Web: www.carsonkaye.co.uk
The failure to prevent fraud offence: a transformational shift
The Cost of Inaction: Why UK Economic Crime Risk Is Rising for Corporates Introduction The past 12 months have marked a significant period of transition in the legal and enforcement landscape for white-collar crime in England and Wales. A com - bination of legislative reform, increased regulatory expectations and changing enforcement strategies has reshaped the risk environment for corporates and senior individuals alike. At the centre of this shift is a clear policy direction, in that the UK is moving away from a model that pri - marily reacts to wrongdoing, towards one that places proactive responsibility on organisations to prevent economic crime. This change is being driven by the scale of fraud, the increasing sophistication of financial crime and the practical limits of traditional enforcement. For businesses operating in or through the UK, the implications are material. Exposure to criminal liabil - ity is expanding and expectations around compliance are rising. As a consequence, enforcement outcomes are becoming more varied and, in some cases, more unpredictable. This article examines the most significant develop - ments over the past year and considers what they mean in practical terms for organisations and their advisers.
The most consequential development in UK white- collar crime law is the introduction of the failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act 2023, which came into force in September 2025. This offence creates a criminal liability for organisa - tions where an associated person commits a speci - fied fraud offence with the intention of benefiting the organisation, unless the organisation can demonstrate that it had reasonable procedures in place to prevent such conduct. This marks a fundamental departure from traditional principles of corporate criminal liability, which have historically required prosecutors to identify a “direct - ing mind and will” within the company. In practice, that test has often made it difficult to prosecute large corporates. The new offence removes that barrier. Liability now turns not on who knew what at board level, but on whether the organisation took adequate steps to pre - vent wrongdoing. The immediate impact has been a rapid increase in compliance activity across large organisations. Busi - nesses are now expected to: • undertake detailed fraud risk assessments; • map exposure across business lines and jurisdic - tions; • strengthen internal controls and financial oversight;
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