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Companies may face prosecution and unlimited fines if they fail to prevent fraud within their organization, starting Monday. A new law, known as the “failure to prevent fraud” law, holds large companies criminally liable if an employee, agent, subsidiary, or associated person commits fraud intending to benefit the organization.
Examples of fraudulent activities could include dishonest sales practices, withholding important information from consumers or investors, or engaging in deceptive financial market practices. If a company is prosecuted, it will have to prove to the court that it had reasonable anti-fraud measures in place.
The law applies to large organizations that meet at least two of three criteria: having more than 250 employees, a turnover of £36m, or total assets of £18m.
The fraud minister, David Hanson, stated that this marks a significant moment for businesses as it strengthens the anti-fraud culture and supports long-term economic growth. Fraud is considered a shameful crime, and authorities are determined to bring those responsible to justice.
According to the law firm Irwin Mitchell, this change represents a fundamental shift in corporate accountability by removing the need to prove the involvement of senior management. Non-compliance with the new Economic Crime and Corporate Transparency Act could result in unlimited fines, reputational damage, and criminal investigations.
While this law
Source: https://www.theguardian.com/business/2025/sep/01/companies-face-prosecution-risk-as-new-law-comes-into-force
