PREPARING FOR THE NEW FAILURE TO PREVENT FRAUD OFFENCE
A new failure to prevent fraud (FTPF) offence introduced in the UK is expected to result in additional activity in the corporate crime enforcement landscape. In this article, we provide an overview of the new offence and recently published guidance on the measure, as well as offering practical guidance on preparing for this significant reform.
Overview of the FTPF
The FTPF is a strict liability offence which applies to a ‘large organisation’ that fails to prevent an ‘associated person’ from committing one of several fraud-specific offences, and where that fraud is intended to benefit, directly or indirectly, the organisation or a client of the organisation.
It is a defence to the FTPF if the company can show, on a balance of probabilities, that it had ‘reasonable prevention procedures’ in place to prevent the fraudulent activity (or if it was not reasonable in all the circumstances to expect the organisation to have any reasonable prevention procedures in place for such fraud).
Implementation pipeline
The UK government has published final guidance on designing reasonable prevention procedures that could provide organisations with a defence to the FTPF. It has also now clarified that the offence will come into force on 1 September 2025.
While it had been anticipated that the implementation period for the FTPF would be six months, this longer period is a welcome development that gives organisations additional time to prepare, and many are doing so.
The extended timeline reflects that the government expects businesses to start making arrangements to mitigate the risk of them committing offences brought in by the reforms. Early preparation is important to install the best compliance environment in advance of the deadline.
Jan-Mar 2025 Issue
Freshfields Bruckhaus Deringer LLP