Experts: Prepare now with U.K. failure to prevent fraud offense on horizon

Fraud prevention is about to get more complicated with penalties rising sharply for U.K. organizations. Starting Sept. 1, larger businesses will be liable to criminal prosecution if any of their employees–or an agent, subsidiary, or other “associated person”–commits fraud that is intended to benefit the company.

This is shining the spotlight on corporate culture and “tone from the top” as executives realize that merely pointing to company policies and mission statements is unlikely to exonerate them if a case comes to court. They will need evidence that they have actively engaged with relevant people and are promoting desired behavior, as well as operating controls to catch fraud if it happens.

The new Failure to Prevent Fraud offense (part of the Economic Crime and Corporate Transparency Act) therefore throws the doors open to a host of new legal cases and exposes businesses to a range of risks. At the very least, relevant companies should now be putting in place measures to identify and prevent fraud taking place.