With the introduction of the new failure to prevent fraud (FTPF) offence under sections 199–206 and Schedule 13 of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), the UK takes a decisive step toward a model of corporate criminal liability based on omission. Effective from 1 September 2025, the provision imposes a duty on large organisations to implement reasonable procedures to prevent fraudulent conduct by “associated persons” – including employees, agents, subsidiaries, or others acting on behalf of the entity.
As James Evison, Partner, and Miranda Joseph, Senior Knowledge Lawyer at Stevens & Bolton, emphasise, “this is not simply a technical legislative development, but a cultural shift in the way organisations manage fraud risk.”
A Proven Legislative Model: From the Bribery Act to the Criminal Finances Act
FTPF builds on a legislative trajectory already established by the UK Parliament through the Bribery Act 2010 (section 7) and the Criminal Finances Act 2017 (sections 45–46), which introduced the offences of failure to prevent bribery and failure to prevent the facilitation of tax evasion, respectively. In all three cases, corporate liability arises not from active wrongdoing, but from the failure to adopt proportionate procedures to prevent predicate offences.
The underlying philosophy is clear: “organisations can no longer rely on passive oversight – they must demonstrate leadership, ethical culture, and risk-calibrated procedures,” Evison and Joseph note. The six guiding principles issued by the Home Office – top-level commitment, risk assessment, proportionate procedures, due diligence, communication, and monitoring – form the backbone of a compliance framework that must be dynamic and embedded in corporate governance.
Enforcement and Practical Challenges: Between Legislative Ambition and Operational Limits
Experience with previous failure-to-prevent offences has revealed significant enforcement challenges. Prosecutions have been rare, often hindered by high evidentiary thresholds and limited investigative resources. “The first prosecution for failure to prevent the facilitation of tax evasion was only brought in August 2025, eight years after the offence came into force,” the authors observe.
FTPF may face similar hurdles unless enforcement bodies are adequately resourced and businesses receive clear, actionable guidance. Nonetheless, reputational risk is already prompting many organisations to strengthen their compliance frameworks. “No sensibly run organisation wants to be the test case for a FTPF prosecution,” warn Evison and Joseph.
Scope and Thresholds: Who Is Liable and for What Conduct?
The offence applies exclusively to “large organisations,” defined as those meeting at least two of the following criteria: more than 250 employees, turnover exceeding £36 million, or assets over £18 million. Liability arises where fraud is committed by an associated person with intent to benefit the organisation or its clients. A UK nexus is required – meaning that at least one act forming part of the fraud or its economic impact must occur within the UK.
The statutory defence is based on the implementation of “reasonable procedures” to prevent fraud, mirroring the defences available under the Bribery Act and Criminal Finances Act. The comparative table included in the Stevens & Bolton article highlights the structural similarities across the three offences, while also noting key differences in scope and evidentiary requirements.
International Outlook and Sectoral Impact
FTPF signals a clear regulatory stance from the UK, contrasting with deregulatory trends such as the US presidential pause on enforcement under the Foreign Corrupt Practices Act. In the EU, while no direct equivalent to FTPF exists, there is increasing focus on corporate accountability, with bodies such as OLAF and EPPO and new anti-money laundering directives shaping the landscape.
From a sectoral perspective, organisations operating in highly regulated industries – finance, pharmaceuticals, utilities – are likely to have existing compliance frameworks that can be adapted to FTPF. Others will need to invest in tailored risk assessments and internal training to meet the new requirements.
Conclusion: A Strategic Opportunity to Reinforce Governance
FTPF is not merely a statutory obligation – it is an opportunity to rethink corporate governance through a proactive lens. As Evison and Joseph conclude, “with the right approach, FTPF can become a strategic advantage – a framework for strengthening governance, protecting reputation, and fostering long-term stability.”
Stevens and Bolton is an independent UK law firm with approximately 150 lawyers, known for providing clear, expert advice to a wide range of clients internationally.
