Clifford Chance

On 6 November 2024, the UK government published guidance for organisations on the new offence of failure to prevent fraud, starting the countdown to the offence's introduction on 1 September 2025.

Other than providing a list of fraud offences that organisations can be liable for failing to prevent, the guidance gives little practical help to organisations in understanding what fraud is and how it can be committed.

Under the Economic Crime and Corporate Transparency Act 2023, from September 2025, large organisations can be criminally liable for failing to prevent fraud committed by employees, agents, subsidiaries or other "associated persons" (subject to certain conditions), unless they can demonstrate that they had reasonable fraud prevention procedures in place at the time of the offence (see our previous blog post here for further details of this offence).

Newly published government guidance on reasonable fraud prevention procedures contains few surprises. Those familiar with the government's guidance on the Bribery Act 2010 will recognise many of its themes. It provides that organisations should:

• Demonstrate a top-level commitment to the prevention and detection of fraud;
• Conduct dynamic, regular risk assessments to assess the nature and extent of the organisation's exposure to fraud risks;
• Implement proportionate risk-based fraud prevention procedures;
• Apply due-diligence procedures in respect of persons who perform or will perform services on behalf of the organisation, in order to mitigate identified fraud risks;
• Ensure that its prevention policies and procedures are communicated, embedded and understood throughout the organisation; and
• Monitor and review its fraud detection and prevention procedures and make improvements where necessary.

One area, however, that the guidance contains little detail on is how fraud can be committed and what conduct falls within the scope of the new failure to prevent offence. This can perhaps be attributed to the fact that fraud can take many forms, and providing any sort of comprehensive guide will be an impossible task, but this is nonetheless unhelpful for organisations that are now faced with considering their fraud prevention procedures in light of the guidance and, in particular, ensuring that risk assessments conducted focus on the full range of fraud risks that an organisation faces.

As a result, we have prepared a high-level guide to the underlying fraud offences that are within scope of the new failure to prevent fraud offence, along with examples of conduct that would be within scope of the offences in a corporate context, with a view to assisting organisations in more fully understanding these offences and the conduct captured by them.

This guide can be accessed here.