Failure to prevent fraud
A UK corporate criminal offence under which large organisations can be prosecuted if a person associated with them commits fraud intended to benefit the organisation, unless reasonable fraud prevention procedures were in place.
Failure to prevent fraud is a corporate offence created by the Economic Crime and Corporate Transparency Act 2023, in force since 1 September 2025. A large organisation can be held criminally liable where an employee, agent or other associated person commits a specified fraud offence intending to benefit the organisation or its clients. The organisation does not need to have known about the fraud.
The only defence is to show that reasonable fraud prevention procedures were in place. Government guidance frames these around familiar principles: top-level commitment, risk assessment, proportionate procedures, due diligence, communication and training, and monitoring and review.
The offence applies to large organisations, but its effects reach further. Organisations in scope are reviewing the controls around their payment processes and asking more of the suppliers and partners they work with. For finance teams, documented supplier verification, segregation of duties and a clear audit trail of payment decisions are practical evidence that procedures are reasonable.
Applies to large organisations meeting two of three criteria: more than 250 employees, more than £36 million turnover, more than £18 million in total assets. The offence covers fraud intended to benefit the organisation, not fraud committed against it.