The New “Failure to Prevent Fraud” Offence Is Live – What Businesses Must Do Now

From 1 September 2025, the UK’s new corporate criminal offence of Failure to Prevent Fraud (FTPF) under the Economic Crime and Corporate Transparency Act (ECCTA) came into force. This landmark change means businesses can face prosecution—and potentially unlimited fines—if they fail to put in place adequate procedures to stop fraud committed by employees or associated persons for the organisation’s benefit.What Has Changed (and Why It Matters)Previously, many fraud prosecutions required proving that senior management was complicit. Under FTPF, liability no longer hinges on proving direct board awareness. Instead, companies must show they had “reasonable prevention procedures” in place. The Crown Prosecution Service (CPS) and Serious Fraud Office (SFO) have updated their joint guidance, making clear that courts will assess the adequacy of controls, risk assessments, culture, training and monitoring.The legal exposure is not trivial. The regime applies to “relevant bodies”—entities with a UK presence and substantial scale—and to fraud by “associated persons.” Defences depend heavily on documented procedures. Businesses lacking mature financial crime frameworks now face real risk.What Businesses Should Do This October

1. Conduct a fraud-risk assessment Map where fraud risk is most acute—procurement, sales discounts, rebates, expense claims, vendor relationships, sales incentives. Identify weak points where control may be absent.
2. Document “prevention procedures” tailored to your risk profile Generic, boilerplate policies won’t suffice. Procedures must be proportionate, embedded, tracked and periodically reviewed.
3. Train your staff and gatekeepers Employees, suppliers, managers and your chain-of-command must understand expectations, red flags, reporting routes and consequences.
4. Monitor and audit continuously Use data analytics, exception reporting, transaction reviews and whistleblowing channels to detect anomalies early.
5. Test your procedures before fraud occurs Simulations, role-play, internal reviews and third-party audits help prove the system works in practice.
6. Involve external advisors Legal, compliance and forensic experts can validate your approach, stress-test documentation and help you demonstrate that you are meeting the new standard.

Risks to Watch

• Poorly documented controls will be scrutinised; absence of evidence is often fatal.
• The transition period is not a grace window—if fraud occurs post-1 September, the new offence applies.
• Third-party risk: control gaps in suppliers or agents may expose you.
• Reputational damage and regulatory penalties may compound costs.

How Accountants and Advisors Can Help

• Offer gap assessments comparing existing fraud controls to FTPF expectations.
• Provide template frameworks and workflows (but tailored).
• Help clients integrate fraud risk into their regular audit, compliance and board reporting cycles.
• For group structures, assist in harmonising procedures across subsidiaries to avoid weakest-link exposure.

In SummaryThe Failure to Prevent Fraud offence shifts the burden of proof more heavily onto businesses to prove they’ve taken anti-fraud seriously. This October is critical: carry out your risk audit, refine procedures, train personnel, and document everything. Delay is dangerous.Book a Fraud-Risk Gap Review with our compliance team — prep your business for the new law.