UK Trends and Developments Contributed by: Bambos Tsiattalou, Richard Cannon and Amjid Jabbar, Stokoe Partnership Solicitors
Stokoe Partnership Solicitors Second Floor 1-3 Staple Inn London WC1V 7QH UK Tel: +44 020 3427 5710 Email: enquiries@stokoepartnership.com Web: www.stokoepartnership.com
Failure to Prevent Fraud Offence Comes Into Effect The Economic Crime and Corporate Transparency Act 2023 (ECCTA), which came into force on 1 September 2025, reforms the law of corporate criminal attribu - tion for economic crimes across a broad spectrum. It makes provision for: • economic crime and corporate transparency; • companies, limited partnerships and other kinds of corporate entity; and • the registration of overseas entities. Most notably, Section 199 of the ECCTA creates a new corporate criminal offence of “failure to prevent fraud” (FTPF), which is intended to hold large organisations to account if they profit from fraud. A “large organisa - tion” meets at least two of the following three criteria: • a turnover of more than GBP36 million; • a balance sheet total exceeding GBP18 million; or • more than 250 employees. Under the offence, large organisations may be held criminally liable where an employee, agent, subsidiary or other “associated person” commits a fraud intend - ing to benefit the organisation, and the organisation did not have reasonable fraud prevention procedures in place. It extends strict corporate liability to a range of fraud offences, including fraud by failing to disclose information, fraud by false representation, and fraud by abuse of position. According to the Home Office, examples may include dishonest sales practices, the hiding of important
information from consumers or investors, or dishon - est practices in financial markets. In the event of pros - ecution, an organisation would have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time when the fraud was committed. The fraud prevention framework should be informed by six principles: • top-level commitment; • risk assessment; • proportionate risk-based prevention procedures; • due diligence; • communication (including training); and • monitoring and review. Procedures to prevent fraud should be proportionate to the risk. The FTPF offence makes it easier to hold organisa - tions to account for fraud committed by employees, or other associated persons, which may benefit the organisation, or, in certain circumstances, their cli - ents. The offence is also designed to encourage more organisations to implement or improve their preven - tion procedures, driving a fundamental shift in corpo - rate culture to help prevent fraud. The introduction of the FTPF offence in the ECCTA marks a further step in the evolution of corporate criminal responsibility for white-collar crime offences. It is a natural progression from the offence of failure to prevent bribery under Section 7 of the UK’s Brib -
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