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 ‘failure to prevent fraud’.
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 ‘associated person’, for the organisation’s benefit
- the organisation did not have ‘reasonable’ 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 came into effect on 1 September 2025.
The guidance was updated in October 2025 to use the term ‘subsidiary undertaking’ as set out in the legislation, rather than ‘subsidiary’.
Updates to this page
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Updated to use the term 'subsidiary undertaking' as set out in the legislation, rather than 'subsidiary'.
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First published.