A new offence of ‘failure to prevent fraud’ has been created under the Economic Crime and Corporate Transparency Act 2023. Under the Act an organisation will be criminally liable if an employee commits a fraud intending to benefit the organisation (ie the employer). Similar to harassment, there is a reasonable steps defence if the organisation can show that they took reasonable steps including procedures to prevent fraud. The offence will come into force on 1st September 2025 for large organisations, who meet two criteria from the following:
• Employ more than 250 employees
• Turnover more than £36 million
• Assets worth more than £18 million
The Home Office has set out guidance on what the reasonable steps defence includes, and rather like the harassment laws, it requires top level commitment, a risk assessment, proportionate risk-based procedures, communication, training, monitoring and review and due diligence.