As highlighted in an earlier article, ‘What Is The New Failure To Prevent Fraud Offence?’, we demonstrated how the UK’s regulatory landscape shifted dramatically with the introduction of the failure to prevent fraud (FPF offence), which came into force under the Economic Crime and Corporate Transparency Act 2023 (ECCTA).
In our follow-up article, our compliance team takes a closer look at how this changes everything for UK businesses and the practical compliance steps that should be considered.
Which Businesses Are Affected by the Failure to Prevent Fraud (FTPF) Offence?
FTPF is a new sweeping corporate criminal liability that fundamentally alters how businesses must approach fraud prevention.
While the new laws only strictly apply to a business with:
- More than 250 employees
- Turnover exceeding £36 million annually
- Total assets exceeding £18 million
Smaller companies can be associated through dealings with a large organisation, and the expectation set by the change will be considered best practice, regardless of the size of the business itself.
Although small businesses may not be expected to adopt the same requirements and recommendations as larger corporations, awareness of the new liabilities is prudent.
This article aims to provide:
- To raise awareness among smaller businesses
- Guidance on next steps for those who fall under the new obligations
If you have any questions or concerns about how the points raised in this article will affect your business, or to discuss our services in more detail, please contact our team at 0203 985 8550, email us at info@regulationandcomplianceoffice.co.uk or complete an enquiry form.
Crucial Changes to the UK Bribery Act
While the title suggests that changes are related to the UK Bribery Act, the reality is more significant. FTPF represents an entirely new offence that extends the Bribery Act into the broader realm of fraudulent conduct. The Economic Crime and Corporate Transparency Act 2023 introduced this strict liability offence, creating unprecedented corporate accountability for fraud committed by employees, agents, and subsidiaries.
Why These Changes Were Deemed Necessary
With fraud representing nearly 40% of all crime in England and Wales, enforcement authorities have signalled their intention to vigorously use these new powers to prosecute those found in breach of the requirements.
The FTPF offence operates independently from the UK Bribery Act 2010, though it mirrors its structural approach. Where the Bribery Act holds companies liable for failing to prevent bribery through adequate procedures, the FTPF offence applies the same corporate liability principle to a broader spectrum of fraudulent activities.
What is the New FTPF Offence?
The new FTPF offence creates strict liability for large businesses where an employee, agent, subsidiary, or other representative commits a specified fraud offence that benefits the business. The legislation deliberately casts a wide net, ensuring comprehensive coverage of corporate fraud scenarios.
The FTPF offence encompasses an extensive range of criminal activities, including:
- Fraud by false representation
- Fraud by failing to disclose information
- Fraud by abuse of position
- Participating in fraudulent business
- Obtaining services dishonestly
- Cheating the public revenue
- False accounting
- False statements by company directors
- Fraudulent trading
What Is Strict Liability?
Unlike traditional criminal offences, which require proof of intent, the FTPF offence applies the strict liability standard. Therefore, businesses face automatic criminal exposure when associated persons commit a covered fraud offence, regardless of whether senior management knew about or authorised the conduct.
On this basis, the burden is deliberately shifted from reactive prosecution to proactive prevention. Companies cannot rely on a defence of ignorance or lack of involvement; instead, they must demonstrate that reasonable fraud prevention policies and procedures were in place.
Defence – How Can Businesses Demonstrate Reasonable Fraud Prevention?
The legislation provides a single defence pathway, whereby businesses must prove, on the balance of probabilities, that they maintained reasonable fraud prevention procedures at the time the fraud occurred, or that implementing such procedures was unreasonable in the circumstances.
This defence requires businesses to demonstrate:
- Comprehensive risk assessment procedures, identifying potential fraud vulnerabilities
- Proportionate prevention procedures tailored to identify potential risks
- Top-level commitment from the board and senior management
- Due diligence processes for business relationships and transactions
- Communication and training programs ensuring business-wide awareness and understanding
- Monitoring and review systems, maintaining procedure implementation and effectiveness
The Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO) have stressed the importance of ensuring that prevention measures are dynamic and not simply a tick-box exercise. Fraud prevention policies and procedures require genuine implementation rather than theoretical compliance.
FTPF Global Enforcement Reach
It is vital that businesses appreciate that the FTPF offence is not isolated to the UK, as it extends beyond UK borders. FTPF liability applies to any company conducting business in the UK, regardless of where the fraudulent conduct occurs. This wider jurisdiction mirrors the Bribery Act’s global reach, making compliance essential for multinational corporations with UK commercial presence.
International businesses with UK subsidiaries, offices, or business activities cannot limit their fraud prevention programmes to UK operations. Comprehensive measures must be implemented across global operations to maintain effective defence capabilities.
What Are the Consequences of Non-Compliance?
Non-compliance with the FTPF offence carries unprecedented penalties, each designed to create a powerful deterrent effect. These penalties include:
- Financial Penalties – Unlimited fines with no statutory ceiling, allowing courts to impose sanctions proportionate to business size and severity of misconduct.
- Reputational Damage – Criminal convictions cause lasting reputational damage, affecting customer relationships, investor confidence, and market positioning.
- Government Contract Debarment – Convicted businesses face exclusion from public sector procurement, potentially eliminating significant revenue streams.
- Regulatory Scrutiny – Enhanced oversight from multiple regulatory bodies, increasing compliance pressures, costs, and operational restrictions.
What Should Businesses Do Now? – Strategic Implementation Requirements
With the FTPF offence now in force, businesses must prioritise immediate compliance measures:
Risk Assessment and Mapping – Conduct comprehensive fraud risk assessments covering all business activities, geographic locations, and third-party relationships. These assessments must identify specific vulnerabilities and prioritise risks based on likelihood and potential impact.
Policy Development and Implementation – Establish detailed fraud prevention policies that address identified risks with specific, actionable procedures. Avoid using generic templates and ensure that policies are tailored to the business’s operations.
Training and Communication – Deploy business-wide training programs, ensuring all staff understand fraud risks, reporting obligations, and prevention procedures. Training must be ongoing and updated to address evolving risks. Keep records of training attendance and completion.
Monitoring and Detection Systems – Establish systems for detecting potential fraudulent activity, including transaction monitoring, audit programs, and whistleblowing mechanisms with appropriate protections for reporters.
How to Integrate with Existing Compliance Programs
Businesses that are already compliant with the UK Bribery Act and tax evasion prevention requirements can build upon existing regulatory frameworks. Requirements under the FTPF offence follow a similar approach, allowing companies to integrate fraud prevention into already established compliance systems.
However, it is vital to remember that fraud prevention requires distinct considerations beyond bribery and tax evasion, including broader risk categories and different detection methods. To comply with the new legislation, businesses are required to enhance existing programs rather than simply extending current procedures.
Guidance From the Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO)
The Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO) published joint updated guidance for prosecutors in August 2025 on dealing with corporate prosecutions. The reminder stressed that prosecutors would evaluate:
- Prevention procedure adequacy based on business size, sector, and risk profile
- Senior leadership engagement in fraud prevention program design and oversight
- Resource allocation demonstrating genuine commitment to prevention
- Incident response effectiveness when fraud issues arise
- Continuous improvement showing evolving prevention measures
Meeting FTPF Requirements – Practical Compliance Steps to Take Now
Businesses should act fast and immediately consider the following to ensure they are meeting the updated requirements:
- Conduct a comprehensive gap analysis comparing current fraud prevention measures against FTPF requirements
- Establish board-level oversight, ensuring senior leadership accountability for fraud prevention
- Document all procedures, creating clear evidence of reasonable preventative measures
- Test prevention systems through regular audits and scenario-based assessments
- Update incident response plans addressing FTPF disclosure and remediation requirements
Seek Professional Support and Guidance from Compliance Experts
At the Regulation & Compliance Office (RACO), we provide regulatory guidance and support for a range of businesses across multiple sectors. We undertake a review of their policies, controls, and procedures to ensure that they are compliant with all regulatory obligations, including those under the new FTPF rules.
By working with RACO, a business can be assured that we will bring the required level of knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:
- Consultancy
- Compliance Policies
- Training
- Handbooks
- Auditing
Get In Touch
We adopt a sensible and pragmatic approach to fees, ensuring we are competitive and always add value. As necessary, we will agree on packaged services to control cost and enable clients to spread payments to alleviate cash flow, yet ensure services are provided when needed.
If you want to discuss our services in more detail, contact us at 0203 985 8550, email us at info@regulationandcomplianceoffice.co.uk or complete an enquiry form.
