ECCTA: Failure to prevent fraud – guidance timeline

The UK government has confirmed the implementation timeline for the failure to prevent fraud offence, with guidance expected imminently.

The failure to prevent fraud offence, introduced last year in the Economic Crime and Corporate Transparency Act 2023, is due to come into force at the end of 2024 or early 2025. The Home Office minister Lord Sharpe of Epsom confirmed the timeline in a written question this month, with guidance anticipated this summer and businesses expected to have six months after the publication of guidance to comply before enforcement begins.

The failure to prevent fraud offence is due to apply to large organisations who meet at least two of the three following criteria:

• More than £36m turnover
• More than £18m in total balance sheet assets
• More than 250 employees

Organisations that meet these thresholds will be required to put reasonable fraud prevention measures in place. This includes preventing fraud by agents, employees, or others acting on behalf of the organisation.

Whilst guidance is still to be published, the UK government’s impact assessment for the offence anticipates organisations with more than 500 staff members will require a full-time team of five personnel and a project director dedicating 20% of their time to the project to put appropriate measures in place.

With guidance expected imminently, and a short timeline for compliance, organisations that meet the thresholds above should look to review and risk assess any existing fraud prevention and detection policies ahead of time. This review should look to identify and mitigate risk areas where fraud could benefit an organisation, not just where the organisation may be a victim.

Our ECCTA topic page includes further detail about the provisions of the Economic Crime and Corporate Transparency Act, including the failure to prevent fraud offence.

Our corporate crime team is here to help guide you through these changes.

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