Large companies in the United Kingdom will face stricter accountability under a new “failure to prevent fraud” law that takes effect. The law, introduced under the Economic Crime and Corporate Transparency Act, makes organisations criminally liable if an employee, agent, subsidiary, or associated person commits fraud intended to benefit the company. Covered businesses must meet at least two of three criteria: more than 250 employees, annual turnover above $45 million, or assets exceeding $23 million. Firms prosecuted under the new offence must demonstrate they had “reasonable anti-fraud measures” in place or risk unlimited fines, reputational harm, and criminal investigation by the Serious Fraud Office or Crown Prosecution Service.
Government officials and legal experts emphasised the impact of the legislation. Fraud Minister David Hanson said, “Today marks a pivotal moment for businesses, and this new offence strengthens our anti-fraud culture to protect businesses, build corporate trust and support long-term economic growth.” Hannah von Dadelszen, Chief Crown Prosecutor at the CPS, added, “Large organisations must act to put robust fraud prevention systems in place or leave themselves open to legal action.” Law firm Irwin Mitchell called the change a “fundamental shift” in corporate accountability, urging businesses to review risk assessments, update internal controls, and ensure training on whistleblowing procedures.
