How will new ‘Failure to Prevent Fraud’ rules affect larger local businesses?

From September 2025, larger businesses in the UK are going to be subject to new rules from the start of September. The aim is to give corporate organisation greater responsibility in relation to preventing fraud and it will be done under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023).

What constitutes a large organisation?

For the purposes of these new rules, a large organisation is one which meets two of the following three criteria: having a turnover of £36 million or above; having more than 250 employees; having total assets worth £18 million or more.

When will a business be liable?

From September onwards a business can be held liable if anyone associated with it (an ‘associated person’) such as an employee or any third party acting for the business commits fraud that benefits the organisation or its clients. The only way in which an organisation can be protected from potentially committing a criminal offence is to have had ‘reasonable procedures’ in place to prevent it at the time the fraud took place.

Discover our range of legal services

What are ‘reasonable procedures’?

These were set out guidance issued by the Home Office in 2024 and are made up of six core principles.

1. There has to be top-level commitment in a business, with senior management actively supporting an anti-fraud culture and allocating resources to ensuring that governance and accountability are clear.
2. The organisation must identify fraud risks within the business, document them, and then regularly review this. The ‘fraud triangle’ of opportunity, motive and rationalisation should be used in this process.
3. A business should have proportionate risk-based procedures. This means that other organisations templates should not be adopted without being modified. Instead, each business should create bespoke fraud prevention policies which are geared to the organisation’s size and risk profile.
4. Due diligence will need to be applied to ‘associated persons’, in particular those linked to the business resulting from merger, acquisition or outsourced contracts.
5. Sufficient training and communication should be provided so that all staff in the organisation understand the policies and how to report their concerns. This is likely to involve additional training in areas of the business such as sales and finance.
6. Once created, the procedures will need to be monitored and reviewed on a regular basis. Data analytics and internal audit findings will form part of this, as potentially will whistle-blower input, with the result being constantly enhanced controls.

What to do next?

If your business is large enough to be subject to the new rules, hopefully you will already have started to prepare for their introduction. If not, you should start now.

Failing to comply is not an option as companies which fall foul of the new regime could find themselves facing prosecution and substantial fines.

While Fraser Dawbarns is not a large enough business to fall under these regulations, we do take our responsibility to prevent fraud very seriously. This is why we have strict procedures in place around various aspects of our business, in particular confirming our clients’ identity and also identifying the source of funds in purchasing transactions.

How To Contact Us:

To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

Wisbech: 01945 461456

March: 01354 602880

King’s Lynn: 01553 666600

Ely: 01353 383483
Downham Market: 01366 383171

This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.