The enforcement of the Failure to Prevent Fraud (FTPF) offence is right around the corner. Is your organisation ready?
The FTPF offence, introduced under the Economic Crime and Corporate Transparency Act 2023, will come into force on 1st September 2025. The offence aims to hold large organisations criminally liable if they fail to prevent fraud committed by employees, agents, subsidiaries, or associated persons intending to benefit the organisation. Overseas entities may also be liable if part of the fraud or its financial impact occurs in the UK.
To comply, organisations must implement “reasonable fraud prevention procedures,” guided by six principles:
- Top-level commitment: Support from senior management to promote a culture where employees can report unethical behaviour without fear.
- Risk assessment: Identify and prioritise fraud risks by analysing business processes and gathering input across departments.
- Proportionate procedures: Implement controls tailored to your risks, such as approval workflows and segregation of duties. Update policies to define unacceptable behaviours.
- Due diligence: Conduct background checks on high-risk employee roles. Also include suppliers and partners within the scope of these checks.
- Communication and training: Provide role-specific training and use real-world scenarios to raise awareness, as well as reinforce messages regularly through various channels.
- Monitoring and review: Set up ongoing monitoring to detect suspicious activity and regularly review controls, updating them as needed.
While everyone at the organisation is responsible for managing fraud risk, it is recommended that an individual is nominated to oversee compliance. This could be a compliance manager or the organisation’s Money Laundering Reporting Officer.
It is essential that organisations review and strengthen their anti-fraud policies and procedures before the FTPF comes into effect. If you would like assistance, Crowe offers fraud awareness training, readiness assessments, policy gap analysis, and other types of counter-fraud advisory to help build resilience against fraud.
Contact Daniel Sibthorpe for a no-obligation conversation around improving your organisation’s resilience to fraud.
