On 1 September 2025, the United Kingdom implemented a significant development in corporate criminal law with the introduction of the ‘Failure to Prevent Fraud’ (FTPF) offence under the Economic Crime and Corporate Transparency Act 2023. This legislation imposes criminal liability on organisations that fail to prevent fraudulent conduct by employees, agents, or subsidiaries where such conduct is intended to confer a benefit on the organisation. Notably, liability arises irrespective of whether senior management had knowledge of the fraudulent act.
The FTPF offence represents a significant shift in corporate accountability. Historically, legal sanctions for fraud have targeted individual perpetrators; the new provisions extend responsibility to the corporate entity itself. Organisations may be prosecuted if they lack reasonable preventative measures to detect and deter fraud, thereby emphasising the expectation that businesses implement robust compliance frameworks.
The legislation applies primarily to large organisations, defined as those meeting at least two of the following criteria in the preceding financial year:
- More than 250 employees;
- Annual turnover exceeding £36 million; or
- Assets exceeding £18 million.
Both UK-based and foreign entities with operations or commercial connections to the UK fall within the scope of the law.
The consequences of non-compliance are substantial. Organisations convicted under the FTPF offence face unlimited fines, potential reputational harm, and heightened scrutiny from regulators, including the Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS). The SFO has indicated its intention to actively enforce the legislation, underscoring the seriousness with which it will be applied.
In practice, compliance necessitates the implementation of comprehensive anti-fraud policies, ongoing risk assessments, employee training, secure reporting channels, and continuous monitoring and review of preventive measures. The legislation aligns with the UK’s broader framework of corporate accountability, including provisions of the Bribery Act 2010, which introduced strict liability for failure to prevent bribery. Together, these measures reinforce a culture of integrity and corporate responsibility.
For corporate boards and senior executives, the FTPF offence represents both a legal obligation and a strategic imperative. Failure to adopt effective anti-fraud procedures exposes organisations not only to legal sanctions but also to significant reputational and financial risk.
Further information is available here.
