Large organisations across England and Wales are being reminded to finalise preparations for a new fraud prevention law that comes into effect on 1 September 2025.
The ‘failure to prevent fraud’ offence, introduced under the Economic Crime and Corporate Transparency Act 2023, will make large organisations legally responsible for fraud committed by their employees, agents or other associated persons. Unless they can show they had reasonable fraud prevention procedures in place, organisations could face prosecution, encouraging stronger corporate governance.
The reminder follows the publication of joint updated guidance by the Crown Prosecution Service and the Serious Fraud Office. This guidance explains how prosecutors will approach corporate fraud cases under the new offence.
It also reflects changes to the identification doctrine, which broadened the definition of who can be deemed responsible for a company’s actions. As a result, organisations can now be held accountable for economic crimes committed by senior managers, making prosecution more straightforward.
Hannah von Dadelszen, Chief Crown Prosecutor for economic crime, said:
“The new ‘failure to prevent fraud’ offence and developments in the identification doctrine represent a major step forward in tackling corporate crime. Together, they remove barriers that have made it harder to hold companies to account. Large companies, charities and other organisations need to act now to make sure they have proper fraud prevention systems in place.”
Nick Ephgrave, Director of the SFO, added:
“Now is the time to take action. Corporations must get their house in order or be ready to face investigation”
Security Minister Dan Jarvis described fraud as a “disgraceful crime” and confirmed that organisations without adequate safeguards will face severe consequences once the law is in force.
The legislation follows a Law Commission review of corporate criminal liability and reflects a wider government push to expand “failure to prevent” laws to cover more economic crime.
The new offence applies to organisations meeting at least two of the following criteria; having more than 250 employees, an annual turnover above £36 million and balance sheet total above £18 million.
Penalties include unlimited fines, though organisations can defend themselves by demonstrating they had reasonable procedures in place.
The CPS and SFO also urged organisations to self-report fraud when identified, emphasising that voluntary disclosure demonstrates good governance.
