Failure to prevent fraud
Also called failure to prevent fraud offence, FTPF
Failure to prevent fraud is a UK corporate criminal offence under the Economic Crime and Corporate Transparency Act 2023. A large organisation is liable if an employee, agent or other associated person commits a fraud intended to benefit it, unless it had reasonable fraud prevention procedures. It took effect on 1 September 2025.
How it works
The offence applies to large companies and partnerships that meet two of three tests in the prior year. The tests are turnover above £36 million, a balance sheet above £18 million and more than 250 employees. Prosecutors do not need to show that senior managers knew of the fraud. The defence is to prove the organisation had reasonable prevention procedures in place.
For banks and insurers the offence covers frauds such as false representations to customers and false accounting, where staff or agents act to benefit the firm. It sits alongside FCA rules on systems and controls and the Consumer Duty. Firms review fraud risk assessments, oversight of agents and training to evidence the defence.
The rules
Creates the offence of failure to prevent fraud by an associated person, punishable by a fine, with a defence of reasonable prevention procedures.
Large companies and partnerships, including overseas bodies where the fraud has a UK linkSets out six principles for reasonable fraud prevention procedures, from top-level commitment and risk assessment to monitoring and review.
Organisations in scope of section 199Common questions
Which fraud offences are covered?
Schedule 13 of the Act lists the base offences. They include the main Fraud Act 2006 offences, false accounting, fraudulent trading and cheating the public revenue. Aiding or abetting one of these offences is also covered.
Does the offence apply to non-UK firms?
Yes, where the fraud has a UK link. A large organisation formed overseas can be prosecuted if an associated person commits a fraud offence under UK law, for example where the victims are in the UK.
Is the organisation liable if it was the victim?
No. The Act excludes cases where the organisation itself was, or was intended to be, a victim of the fraud. The offence targets fraud committed to benefit the organisation or the people it provides services to.
What penalty applies?
An organisation convicted on indictment faces a fine, and the Act sets no maximum for conviction on indictment. Individuals who commit the underlying fraud remain separately liable under the base fraud offences.
