1. What is the new offence?
The offence will apply to organisations when a fraud offence is committed by an employee or agent, for the organisation's benefit, and the organisation did not have reasonable fraud prevention procedures in place. It will not need to be proven that consent or connivance existed.
2. What is the new offence?
The offence will apply to organisations when a fraud offence is committed by an employee or agent, for the organisation's benefit, and the organisation did not have reasonable fraud prevention procedures in place. It will not need to be proven that consent or connivance existed.
3. What is the new offence?
The offence will apply to organisations when a fraud offence is committed by an employee or agent, for the organisation's benefit, and the organisation did not have reasonable fraud prevention procedures in place. It will not need to be proven that consent or connivance existed.
4. What defence is available to organisations in respect of the offence?
It is a defence for the organisation to prove that they had reasonable procedures in place to prevent fraud. The government will be under a statutory duty to publish guidance to set out reasonable fraud prevention procedures before the offence comes into force.
5. What next for organisations?
Pending government guidance on what might constitute reasonable procedures to prevent fraud, organisations are recommend to carry out a review of existing fraud prevention measures and, to the extent necessary, review these to incorporate further measures. Such measures might include:
- assessment of risks of fraud in the business and review of existing policies;
- preparation of additional policies and procedures to combat the risk of fraud;
- training on the new duty and any newly implemented policies and procedures;
- financial controls;
- robust transactional and third-party diligence procedures;
- clear and effective fraud audit and monitoring processes; and
- regular and thorough reviews of internal systems and controls to ensure appropriate measures are maintained.
The offence will come into force after the Economic Crime and Corporate Transparency Bill receives Royal Assent and the government has published guidance, both of which are expected to take place in Autumn 2023. If convicted, an organisation can receive an unlimited fine. The government is not proposing to introduce personal liability for directors and senior managers, who can already be prosecuted for committing, encouraging or assisting fraud, under this offence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
