The “Failure to Prevent Fraud” offence, introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), will take effect on 1 September 2025. This legislation is designed to hold businesses accountable for fraud committed by individuals acting on their behalf. With the offence’s implementation deadline fast approaching, businesses must take proactive steps to strengthen their fraud prevention frameworks.
The Act applies to “large organisations” – defined as businesses meeting at least two of the following criteria:
- Over 250 employees
- Annual turnover exceeding £36 million
- Total assets of more than £18 million
However, even businesses not directly covered by this law can benefit from adopting the principles outlined in the government’s guidance to protect themselves from fraud risks.
What Is the “Failure to Prevent Fraud” Offence?
Under the new offence, businesses may be held liable if a person associated with them commits fraud intending to benefit the organisation. Liability applies even if senior management was unaware of the fraudulent act, unless the business can demonstrate that it had reasonable fraud prevention procedures in place.
Ken Dulieu, Chairman of Capcon and Head of Capcon Argen, explains:
“The introduction of this legislation signals a significant shift in corporate accountability. Beyond avoiding fines, it’s an opportunity for businesses to prioritise proactive fraud prevention measures that not only reduce risks but also builds trust with stakeholders.”
Principles of Fraud Prevention
The UK government’s guidance outlines six principles for businesses to follow when designing fraud prevention procedures. These principles are flexible and adaptable to businesses of different sizes and complexities:
- Leadership Commitment
Strong leadership is critical for embedding fraud prevention into an organisation’s culture. Directors and senior managers should:
- Promote fraud prevention as a business priority.
- Allocate resources for fraud prevention training and governance.
- Encourage employees to report suspicious activities without fear of retaliation.
- Fraud Risk Assessment
A robust risk assessment helps organisations identify areas where fraud is most likely to occur. This involves examining:
- Departments or roles with higher exposure to fraud risks.
- Incentives or pressures that might motivate unethical behaviour.
- Opportunities for fraud within internal processes and controls.
- Proportionate Measures
Fraud prevention measures should align with the organisation’s risk profile. Examples include:
- Conducting pre-employment screening for roles with access to sensitive data.
- Implementing controls to limit access to critical systems.
- Reviewing and updating policies to reflect changes in the business or regulatory environment.
- Due Diligence
Effective due diligence is essential for assessing the risks posed by associated persons, including employees, contractors, and suppliers. Tailored checks can uncover potential vulnerabilities and ensure compliance throughout the supply chain.
- Communication and Training
Fraud prevention policies should be well-communicated across the organisation. Regular, role-specific training ensures employees understand their responsibilities and how to recognise and report fraud.
Ken Dulieu adds:
“Employees are a business’ first line of defence. Tailored training not only equips them with the tools to act but also reinforces the organisation’s commitment to ethical practices.”
- Monitoring and Review
Fraud prevention procedures must be dynamic and responsive to changes in the organisation or industry. Regular monitoring and review allow businesses to refine their approach and address new risks as they arise.
Capcon’s Anti-Fraud Services
Fraud is a universal challenge that affects businesses of all sizes and industries. At Capcon, we provide comprehensive anti-fraud solutions tailored to meet the unique needs of organisations across diverse sectors.
- Tailored Anti-Fraud Procedures
Capcon’s anti-fraud protocols are designed to align with government guidelines and industry standards. Our scalable solutions address your organisation’s specific operational needs, from supply chain management to financial transactions, ensuring fraud risks are minimised at every level.
- Risk Assessments
Our in-depth risk assessments identify potential fraud vulnerabilities within your organisation. We evaluate your operational practices, security measures, and internal controls to pinpoint weaknesses and recommend robust safeguards tailored to your industry and risk profile.
- Anti-Fraud Culture Training
Capcon offers bespoke training programmes to build fraud awareness across all levels of your organisation. Our courses, tailored to your industry, cover ethical behaviour, the implications of fraud, preventive measures, and more, fostering a culture of accountability, vigilance, and integrity among your teams.
- Ongoing Fraud Prevention Strategy Reviews
Fraud tactics are constantly evolving. Capcon ensures your fraud prevention strategies stay effective through regular reviews and updates. Our team helps you adapt to new fraud threats and regulatory changes, ensuring your organisation remains protected over time.
- Thorough Due Diligence
Capcon’s due diligence services include vetting suppliers, third parties, and new hires, alongside continuous monitoring of existing staff. We focus on verifying information accuracy, managing financial controls, and enforcing conflict of interest policies to mitigate risks and uphold your organisation’s integrity.
Practical Steps for Businesses
With the offence coming into force in September 2025, businesses should act now to prepare. Here are key steps to take:
- Conduct a Fraud Risk Assessment: Identify vulnerabilities and prioritise areas for improvement.
- Review Existing Policies: Ensure current fraud prevention measures align with the guidance.
- Enhance Due Diligence: Implement rigorous vetting processes for employees, contractors, and suppliers.
- Strengthen Whistleblowing Procedures: Provide secure, anonymous channels for reporting fraud.
- Deliver Role-Specific Training: Tailor programmes to address the unique risks associated with different roles.
- Establish Clear Reporting Lines: Ensure employees can report concerns directly to senior management when needed.
Why Early Action Matters
Failing to implement reasonable fraud prevention measures can result in significant fines and reputational damage. Businesses must demonstrate that they have taken sufficient steps to mitigate fraud risks or face legal consequences.
Ken Dulieu emphasises:
“Fraud thrives in environments where complacency is allowed to take root. By addressing vulnerabilities now, businesses can create a culture of accountability and resilience that not only prevents fraud but also strengthens their operations.”
Why Choose Capcon Argen?
Fraud prevention isn’t just about avoiding financial losses, it’s about protecting your reputation, maintaining stakeholder trust, and ensuring business resilience. Capcon Argen works with organisations across sectors to implement proactive measures that safeguard against fraud and support sustainable growth.
Whether you operate in retail, finance, law, hospitality, manufacturing, or another industry, Capcon’s expertise can help you strengthen your defences and create a fraud-resistant environment.
Contact us to find out more.
