Organisations face new fraud prevention law

Large organisations across England and Wales are being urged to make necessary preparations for the new fraud prevention law, set to take effect on 1 September 2025. This reminder follows the joint publication of updated guidance for prosecutors by the Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO). The new "failure to prevent fraud" offence will impose legal responsibility on large organisations to prevent fraudulent activities committed by their employees and associated individuals. Consequently, businesses, charities, and other organisations could face prosecution for failing to establish adequate fraud prevention measures, which is expected to promote better corporate behaviour.

Last year, the Home Office published guidance aimed at helping organisations understand the necessary steps for complying with the new law, including implementing robust systems and training aimed at fraud prevention. The updated guidance to prosecutors also addresses alterations to the ‘identification doctrine’ introduced under the Economic Crime and Corporate Transparency Act 2023. This expanded definition of accountability is designed to simplify the process of legally holding organisations responsible for economic crimes committed by senior management.

Hannah von Dadelszen, Chief Crown Prosecutor leading on economic crime for the CPS, expressed, "The new ‘failure to prevent fraud’ offence and developments in the identification doctrine represent a major step forward in tackling corporate crime. Together, they remove barriers that have made it harder to hold companies to account, and our updated guidance equips prosecutors to make full use of these changes.” She added that preventing fraud is crucial for protecting both the public and the economy, stating, "The public are entitled to have confidence that companies will be held to account for wrongdoing. Large companies, charities and other organisations need to act now to make sure they have proper fraud prevention systems in place.”

Echoing this message, Nick Ephgrave, Director of the Serious Fraud Office, noted, “This updated guidance, published by the SFO and CPS, will help prepare prosecutors to pursue corporations which are failing to comply with their responsibilities under the law. Now is the time to take action. Corporations must get their house in order or be ready to face investigation.” Security Minister Dan Jarvis also commented on the new legislation, proclaiming, “Fraud is a disgraceful crime, and we are determined to provide the highest level of protection for the public. The new ‘failure to prevent fraud’ offence means those without proper fraud prevention procedures in place will face severe consequences.”

These changes to the law stem from the Law Commission’s review of corporate criminal liability, with the CPS and SFO collaborating closely with government departments to advocate for an expansion of the existing ‘failure to prevent’ law pertaining to broader economic crime. To reinforce responsible corporate governance, the CPS and SFO encourage organisations to report any instances of fraud they uncover, with self-reports directed to the Serious Fraud Office, regulatory bodies like the Financial Conduct Authority, or local police forces.