On 26 October 2023, the Economic Crime and Corporate Transparency Act 2023 received royal assent.
The law covers a wide range of reforms, including changes to Companies House and greater powers for the Serious Fraud Office and the National Crime Agency to combat economic crime.
The introduction of the offense of "failure to prevent fraud" and the extension of corporate liability for economic crimes means that the law represents the biggest legislative reshuffle in the area of โโeconomic crimes since the Proceeds of Crime Act 2002.
The offense of failure to prevent fraud operates as follows: a large organisation, i.e. companies or associations that meet two of the following conditions: turnover exceeding ยฃ36 million; balance of ยฃ18 million or more; or more than 250 employees โ will be guilty of the offense if an employee or a third party acting on their behalf commits fraud with the intent to benefit the organization.
The definition of fraud is broad and covers crimes such as greenwashing or false accounting, but excludes cases where the organization is the victim.
Organizations have a complete defense against this crime if they can demonstrate that they had Reasonable fraud prevention procedures implemented.or that it was reasonable for him not to have any procedure.
