UK Government Issues New Guidance on Corporate Criminal Offense for ‘Failure to Prevent Fraud

The UK government has introduced new guidelines addressing the corporate criminal offense of “failure to prevent fraud,” targeting large organizations that may profit from fraudulent actions. This new offense holds companies liable when an employee or other associated individual engages in fraud with the intent to benefit the organization.

The offense encompasses a range of fraudulent activities, such as dishonest sales practices, concealing essential information from consumers, and deceptive conduct in financial markets. To avoid facing prosecution under this new law, organizations must be able to demonstrate in court that they had adequate fraud prevention measures in place at the time of the offense.

The guidance, available to businesses now, was developed in collaboration with key agencies, including the Serious Fraud Office (SFO) and the Financial Conduct Authority. The law is set to come into effect on 1 September 2025. According to the UK Home Office, the goal is to “build an anti-fraud culture,” similar to the impact of the “failure to prevent bribery” legislation introduced in 2010, which has reshaped corporate culture in the UK over the past decade.

Fraud currently represents about 40% of all crime in England and Wales, making it the most prevalent crime in the UK. Lord David Hanson, Minister for Fraud, emphasized that authorities are “determined to root out” fraud in the UK.

Nick Ephgrave, Director of the SFO, highlighted the serious impact of corporate fraud, stating that it “significantly damages confidence in UK companies” and “ultimately costs the taxpayer.” He added a warning to corporations: “Time is running short for corporations to get their house in order or face criminal investigation.”

By fLEXI tEAM