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After much discussion, insights and training, today, the 1st of September brings in a further change to the corporate crime landscape – the new failure to prevent fraud offence (FtPF).
From interactions with employees to foreign agents, the offence ensures that as long as there is a nexus to the UK, a corporate that fails to prevent fraud by an associated person could be investigated and prosecuted; Unless, it can demonstrate that it had reasonable procedures in place, or that it was not reasonable to have any.
The Joint Guidance from the Crown Prosecution Service and Serious Fraud Office (the Guidance)
The Guidance, launched in August, is set to have a profound impact on how the new FtPF offence is applied.
The Guidance makes it clear that prosecutors are now instructed to assess upfront whether a company has adequate or reasonable procedures in place to prevent fraud. This shifts the burden toward proactive compliance and allows early-stage representations from companies to potentially avoid charges.
Where facts overlap, prosecutors are encouraged to map out alternative offences. Hence, the FtPF charge may now be used strategically alongside or instead of other offences.
The Guidance also outlines clear criteria for when prosecution is warranted such as repeat misconduct, ineffective compliance or significant harm. Conversely, proactive self-reporting and strong remedial action may weigh against prosecution.
Are you ready?
Large corporates must now demonstrate robust fraud prevention systems- not just policies, but training, monitoring and reporting mechanisms.
If you have not already started the task of reviewing what compliance policies and procedures you have and whether those address the new offence, now is the time to do so. Failure to act will invite scrutiny and potential prosecution.
Year zero may look nothing like year 5, so it is important to ensure that the risks to the business are regularly monitored.
Compliance culture: a call to action
The Guidance marks a significant shift in enforcement posture by actively warning corporates to “get their house in order” or face investigation. As such, it indicates a cultural shift toward active enforcement and deterrence.
The Guidance doesn’t just clarify prosecutorial mechanics, it signals a new era of corporate accountability.
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United Kingdom