UK Fraud Crackdown: New Failure to Prevent Fraud Law Targets Businesses That Have “Turned a Blind Eye for Too Long”

Digital compliance experts SmartSearch have warned that the UK’s new failure to prevent fraud offence is a “wake up call” for large firms that have “turned a blind eye for too long”.

The new offence, which came into effect on Monday as part of the Economic Crime and Corporate Transparency Act 2023, means businesses could face prosecution if they profit from fraud committed by employees — even if senior managers were unaware. It applies to organisations with more than 250 staff, £36 million in turnover and £18 million in total assets. The offence covers a wide range of fraudulent activities, including dishonest sales practices, market manipulation, and concealing information from consumers or investors. The Government hopes it will prompt businesses to clamp down on scams, foster a stronger anti-fraud culture, and ensure senior managers clearly communicate their stance while investing in the right training and resources.

Fraser Mitchell, Chief Product Officer at SmartSearch, says the law will turn compliance from a box ticking exercise to an operational requirement that must be embedded across the business, he said: “The introduction of the ‘failure to prevent fraud’ offence marks a significant step forward in holding businesses accountable and strengthening the UK’s anti-fraud framework. While many organisations have compliance policies in place, this new law underscores that policies alone are not enough — firms must ensure they are actively embedded, monitored, and enforced across every level of the business.

“For many firms, it is a real wake up call – for too long, large organisations have been able to point to policies on paper while turning a blind eye to what was happening in practice. That is no longer good enough. Senior leaders will now be held accountable, and the consequences of inaction could mean criminal liability, reputational damage, and significant financial penalties.”

“And there really is no excuse for not putting robust fraud prevention in place. The technology exists to help companies identify risks, monitor behaviour, and demonstrate they are meeting their obligations. Those that act now will not only comply with the law but also protect their customers, shareholders, and long-term trust in their business.”