How should HR prepare for the new corporate offence of failure to prevent fraud?
From 1 September 2025, large organisations may be held criminally liable for fraud committed by their employees, or other associated persons, where the intention was to benefit the organisation or its clients.
The offence applies to organisations that meet at least two of the following criteria:
- more than 250 employees;
- more than £36 million turnover;
- more than £18 million in total assets.
Further detail about which organisations are covered is set out in government guidance on the new offence.
An organisation will have a defence if it can show that it has reasonable procedures in place to prevent fraud.
HR is likely to have a role to play in preparing for the new offence by ensuring that the organisation has appropriate fraud prevention measures in place, particularly in relation to employees. For example, HR may be involved in:
- anti-fraud training;
- maintaining effective whistleblowing procedures;
- investigations into suspected fraud;
- risk assessments of bonus and commission frameworks, to avoid encouraging fraud;
- maintaining a culture that deters fraud and encourages staff to raise concerns;
- pre-employment and ongoing vetting checks; and
- integrating fraud messaging into existing policies and procedures.
The government guidance provides principles to follow when putting in place a fraud prevention framework. It sets out risk factors to consider and recommends steps to take to reduce opportunity and disincentivise fraud.
