Failure To Prevent Fraud
Glossary
Failure to Prevent Fraud
Failure to Prevent Fraud is the new UK corporate criminal offence introduced by the Economic Crime and Corporate Transparency Act 2023, holding large organisations criminally liable if an associated person commits fraud intending to benefit the organisation, unless the organisation can show it had reasonable fraud-prevention procedures in place.
Applies to "large organisations" — those meeting two of three thresholds: more than 250 employees, more than £36 million turnover, or more than £18 million in total assets. The offence comes into force 1 September 2025. The "reasonable procedures" defence requires a documented fraud prevention framework: risk assessment, due diligence, training, monitoring, and top-level commitment. Government statutory guidance was published in November 2024.
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