CMS' practical briefing paper highlights the new offence of failure to prevent fraud, marking essential information for anyone operating in businesses in the UK.
A new corporate criminal offence, “failure to prevent fraud,” has been introduced in the UK under the Economic Crime and Corporate Transparency Act 2023 and will take effect on 1 September 2025.
This offence applies to all large corporates operating in the UK that meet at least two of the following criteria:
- Annual revenue exceeding £36 million
- Balance sheet total exceeding £18 million
- More than 250 employees
The new offence creates strict criminal liability for large organisations for the acts of their employees, agents and any other person providing services for or on the organisation’s behalf, where their fraud was intended to benefit the company. And the stakes are high, with potentially unlimited fines being imposed on companies found guilty of the offence.
Only companies with reasonable fraud prevention procedures will have a defence.
Corporates should be planning to put controls in place now that will protect themselves against fraud and prevent employees or agents from breaching fraud law in the course of their work.
Since ECCTA has the potential to expose companies to a far greater risk of criminal law enforcement than has been known before, the CMS Corporate Crime team has analysed the key provisions of ECCTA and considered its impact. Their briefing incorporates key takeaways from this guidance and provides practical advice for designing and implementing effective fraud prevention controls.
Learn More:
To request the practical briefing paper, please contact campaigns@cms-cmno.com.
About CMS:
CMS is a forward-thinking global organisation of independent law firms, boasting over 80 offices in more than 40 countries, and a network of 5,800 lawyers. Combining deep local market knowledge with a broad global perspective, CMS offers dynamic and agile legal solutions to help clients navigate the future with confidence. The firm's focus on social impact, diversity, and sustainability underscores their significance in conversations on governance and future-facing leadership. NEDA are proud to be working in partnership with CMS.