Offence of 'failure to prevent fraud' introduced by ECCTA
Guidance for large organisations on the offence created by the Economic Crime and Corporate Transparency Act 2023.
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The Economic Crime and Corporate Transparency Act 2023 (ECCTA) created a new corporate criminal offence of 鈥榝ailure to prevent fraud鈥�.
This guidance provides advice to large organisations on procedures they can put in place to prevent fraud.
Under the legislation, an organisation will be criminally liable where:
- a specified fraud offence is committed by an employee, agent or other 鈥榓ssociated person鈥�, for the organisation鈥檚 benefit
- the organisation did not have 鈥榬easonable鈥� fraud prevention procedures in place
It does not need to be shown that company managers ordered or knew about the fraud.
The offence applies to:
- all large incorporated bodies, subsidiaries and partnerships
- large not-for-profit organisations such as charities if they are incorporated
- incorporated public bodies
The offence does not apply to:
- police forces
- government departments
The offence will come into effect on 1 September 2025.
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