Get your house in order, says SFO boss as corporate fraud countdown begins
Big businesses have nine months to implement fraud prevention procedures, with the Serious Fraud Office director warning that “time is now running short for corporations to get their house in order”.
Today, the Home Office published its guidelines on the offence of failure to prevent fraud.
Fraud is the most common type of crime in the UK. The regulator hopes a new criminal offence will help hold large organisations to account if they profit from any type of fraud.
The rules were introduced last year as part of the Economic Crime and Corporate Transparency Act (ECCT).
Businesses now have nine months to put the processes in place to prevent fraud or be held criminally liable.
Under the offence, large businesses are defined as having more than 250 employees, a turnover of more than £36m, or total assets of more than £18m.
The guidance states these businesses may be held criminally liable if an employee, agent, subsidiary, or other ‘associated person’ commits fraud intending to benefit the organisation.
The examples provided include dishonest sales practices, hiding important information from consumers or investors, and dishonest practices in financial markets.
In the event of prosecution, an organisation would have to demonstrate to the court that it had reasonable fraud prevention measures in place when the fraud was committed.
Speaking exclusively to City PM, the Serious Fraud Office director Nick Ephgrave stated that the agency “is determined to act swiftly and send a strong signal to companies profiting from malpractice that such behaviour will not be tolerated.”
He explained that “corporate fraud serves to damage confidence in UK companies and ultimately costs the taxpayer. This law, by making every large company legally responsible for preventing fraud by their employees, enables us to take action if they fail in that duty.”
“With these new fraud enforcement powers we have the opportunity to make a positive difference in the fight against fraud and better protect the public and our economy more widely,” he added.
Speaking on the guidance, Lord David Hanson added: “This guidance marks the first steps towards a corporate culture shift around fraud prevention.”
The new powers will come into force on 1 September 2025.