In September 2025, the Economic Crime and Corporate Transparency Act 2023 is introducing a new ‘failure to prevent fraud’ offence. This targets large organisations with the aim of changing the current culture surrounding fraud prevention in corporate environments.

The new offence will close loopholes that have allowed other organisations to avoid prosecution in the past.

Who will be affected?

The failure to prevent fraud offence will target all organisations that meet at least two of the following requirements:

  • Have more than 250 employees
  • Have more than £36 million turnover
  • Have more than £18 million in total assets.

If a parent company is liable, its subsidiaries can also be held liable.

Is this offence limited to the UK?

The offence applies not only to UK-based organisations, but also to overseas entities with UK connections. As a result, actions by employees of overseas subsidiaries or parent companies with links to the UK can bring the entire corporate group within the scope of the offence.

Could my organisation be caught by the legislation in the future?

Although your organisation may not currently meet the requirements to be within the scope of the new legislation, you should consider whether it will in the future.  This could occur, for example, through organic growth, acquisition or restructuring with the UK or overseas.

What are the elements of this offence?

There are three elements that make up this offence. An organisation can be criminally liable where a specified fraud offence is committed:

  • By an employee, agent, subsidiary or person associated with the organisation
  • On behalf of the organisation
  • With the intention of benefiting the organisation or its clients.

What are the specified fraud offences?

Schedule 13 of the Economic Crime and Corporate Transparency Act 2023 outlines the following offences:

  • Fraud by false representation
  • Fraud by failing to disclose information
  • Fraud by abuse of position
  • Obtaining services dishonestly
  • Participation in a fraudulent business
  • False statements by company directors
  • False accounting
  • Fraudulent trading
  • Cheating the public revenue
  • Aiding, abetting, counselling or procuring the commission of any of the above.

Key points

The ‘benefit’ to the organisation or clients does not need to be financial. An offence can still occur even if the organisation or its clients do not actually receive any benefit.

An intention not to prevent fraud is sufficient for an organisation to be liable. And providing benefit to the organisation or its client does not need to be the sole motivation for the offence.

This legislation is designed to close a key gap in previous legislation: liability can arise regardless of whether senior management knew the offence was occurring.