UK: Failure to Prevent Fraud Offence: In force from 1 September 2025

Authors: Charles Urquhart, Corinna Harris, and Charlotte Stern

A new corporate criminal offence of ‘failure to prevent fraud’ will apply to large employers, making it easier to prosecute employers for economic crime.

From 1 September 2025, where fraud is committed by an organisation, large employers will be liable under a new corporate criminal offence of failure to prevent fraud – unless they can demonstrate that they had measures in place to prevent fraud by their employees or other associates.

A large employer is one that meets two or more of these three requirements (in relation to the organisation as a whole, including subsidiaries):

(i)      A turnover of over £36m

(ii)     Total assets of over £18m; or

(iii)    Over 250 employees

The guidance issued by the Home Office sets out the types of fraud covered by the offence and reasonable fraud prevention procedures that employers should undertake.

Key Action Points for Human Resources and In-house Counsel

The introduction of this offence represents a fundamental shift in corporate responsibility with the emphasis now firmly on employers to take proactive measures to prevent fraud. Steps that employers should be taking include:

• Carrying out a comprehensive fraud risk assessment
• Implementing and documenting proportionate fraud prevention measures
• Training staff and embedding a culture of integrity, and considering how to reduce internal motivations to commit fraud
• Publicising their whistleblowing policies and procedures
• Considering updating employment contracts and policies to support the organisation’s fraud prevention measures
• Reviewing and updating fraud detection and prevention procedures regularly

You can read more about this new offence in: Failure to Prevent Fraud Offence – Is your Organisation ready?