Corporate Crackdown: New Prosecution Guidance Ahead of "Failure to Prevent Fraud" Offence

The UK's Crown Prosecution Service (CPS) and Serious Fraud Office (SFO) updated guidance on corporate prosecutions serves as a timely reminder of the new “failure to prevent fraud” offence coming into force on 1 September 2025.  You can read our previous article on the offence here.

Importantly, the updated guidance for prosecutors across England and Wales covers dealing with corporate prosecutions and changes to the identification doctrine under the Economic Crime and Corporate Transparency Act 2023.  

The key takeaway which has been consistent throughout and reinforced by the updated guidance is that, through the actions of its senior managers, a company being prosecuted for failing to prevent economic offences may also be prosecuted for the underlying fraud/economic offence. Turning a blind eye and/or failing to have the proper processes in place is no longer an option. 

The new offence - what you need to know

• The “failure to prevent fraud” offence:
  • makes large organisations criminally liable if they failure to prevent fraud committed by an employee or other associated person (e.g. agent) for the organisations' benefit.
  • applies to “large organisations", being organisations which satisfy two of the following three requirements: 1) more than 250 employees, 2) annual turnover of more than £36 million, and/or 3) balance sheet total of more than £18 million.
• If you are convicted, the fine is limitless.
• You can defend yourself by showing that you had reasonable fraud prevention procedures in place, or that it was not reasonable to expect to have such procedures in place.

Be prepared

There is not long now until your organisation could be faced with a prosecution under the new offence, so if you have not done so already, we would recommend quickly implementing robust procedures across your organisation to mitigate your risk and protect your organisation against the financial, regulatory and reputational cost of a prosecution.

If you have any questions or concerns about being ready for this new offence, please get in touch with David Pack, Matthew Garbutt or Avary Patutama.