A major shift in the fight against economic crime has taken effect today (1 September), with the launch of a new corporate criminal offence targeting companies that fail to prevent fraud within their operations.
The measure, introduced under the Economic Crime and Corporate Transparency Act 2023, places direct responsibility on large organisations to ensure they are not profiting from fraudulent activity. If fraud is carried out by an employee, agent, or subsidiary for the organisation’s benefit, the company itself can face prosecution unless it can show it had strong preventative systems in place.
The new offence is designed to foster a culture of accountability, echoing the impact of earlier “failure to prevent bribery” legislation. It applies to a range of dishonest practices, from misleading sales tactics to concealing vital information from consumers or investors.
The government has backed the move with broader anti-fraud initiatives, including action against SIM farms, a formal agreement with the insurance industry, and international leadership in adopting the first UN resolution on fraud. These efforts come amid troubling statistics showing fraud rising by nearly a third in the past year.
Ministers and prosecutors have hailed the offence as a “game-changing tool” for building trust in UK business. Fraud Minister Lord Hanson described it as a “pivotal moment” that will strengthen economic resilience, while the Serious Fraud Office and Crown Prosecution Service confirmed they are prepared to use the new powers to hold corporations to account.
With the legislation now in effect, companies are being urged to act quickly, embedding fraud prevention into their compliance frameworks or risk facing the courts.
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