As of 1 September 2025, the new Failure to Prevent Fraud (FtPF) offence is now in force.
Introduced by the Economic Crime and Corporate Transparency Act 2023, the offence is designed to hold organisations to account for fraud committed by associated persons (employees, subsidiaries or agents), where the fraud was committed with the intention of benefiting the organisation or their clients.
This is a major shift in corporate liability. If your firm or your partners meet the criteria, you’ll need to act.
The offence applies to large organisations that meet two out of three of the following:
It also applies to overseas companies and partnerships with a UK connection, for example, if part of the fraud took place in the UK.
Even if your firm doesn’t meet the thresholds, you may work with partners who do. Those firms may expect you to have a fraud prevention framework in place.
With the offence now in effect, organisations must have implemented "reasonable" fraud prevention procedures to establish a defence. Guidance from the Home Office sets out six key principles that should shape a fraud prevention framework:
Senior management should foster a culture within the organisation in which fraud is never acceptable. Clear communication, governance structure, resources and training are needed for preventing fraud.
Organisations should produce a comprehensive assessment of their fraud risks, covering all elements in the fraud triangle; opportunity, motive, rationalisation. This should be reviewed regularly, both periodically and following significant organisational changes.
This includes procurement processes, improving data security and ensuring that there are internal disciplinary and reporting procedures for those found to be committing fraud.
This should be conducted on all associated persons. The focus should be on high-risk roles and relationships, emphasising a risk-based approach to controls. Relevant organisations may choose to conduct their due diligence internally, or externally through consultants.
The organisation should encourage a top-down approach to communication. Training should include ensuring that staff and other associated persons are familiar with whistleblowing policies. This can be done through existing training programmes or with bespoke training to address specific fraud risks.
The procedures implemented should be subject to regular reviews to ensure their effectiveness. Organisations should conduct periodic reviews and adjust measures based on new risks or incidents. Reviews can be conducted by an external party or internally and should include scenario testing to ensure procedures are fit for purpose.
Our highly experienced specialists, including ex-regulators, compliance officers and transformation experts, work with firms across multiple sectors to strengthen financial crime frameworks.
With the Failure to Prevent Fraud offence now in force, we help businesses assess liability, close gaps and implement practical, proportionate controls.
Download our brochure or get in touch to find out more.
To help firms assess their preparedness, we’ve created a short self-assessment tool. It takes less than five minutes and gives you an instant snapshot of your fraud risk framework.
And if you'd like to hear more about what the offence covers and why it matters, watch our on-demand webinar now.
James has worked in financial crime compliance across a range of sectors and firms for over 20 years.
As a certified fraud investigator, James has experience in all three lines of defense: conducting investigations, designing and delivering fraud controls and risk assessments, as well as creating and reviewing policies and procedures.