UK’s “Failure to Prevent Fraud” Corporate Criminal Offense Comes into Effect

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A new corporate criminal offense of “failure to prevent fraud” has officially come into force in the UK today (September 1, 2025) under the Economic Crime and Corporate Transparency Act 2023. 

The legislation holds large organizations criminally liable if their employees, agents, subsidiaries, or other associated people commit fraud to intentionally benefit the organization. 

Prosecuted organizations will be required to prove they had reasonable fraud-prevention measures in place at the time of the offense, or face a fine.

The Act defines large organizations as entities that satisfy two or more of the following conditions: a turnover of more than £36m ($48.7m); a balance sheet total of more than £18m ($24.3m); or having more than 250 employees. 

The UK government says the offense is designed to “drive an anti-fraud culture and improve business confidence.” The new offense is the latest in a series of recent fraud-prevention initiatives in the UK, including a ban on SIM farms.

Fraud Minister Lord Hanson describes the introduction of the new offense as “a pivotal moment for businesses.” 

Solicitor General Lucy Rigby KC MP echoes Lord Hanson’s sentiment: “This new legislation sends a clear message that large organisations must take responsibility for preventing fraud, and those that fail to do so will be prosecuted with the full force of the law.”

The UK government states that tackling fraud is a “key focus,” following a 31% increase in fraud in England and Wales between 2024 and 2025.