Introduced by the Economic Crime and Corporate Transparency Act 2023, the failure to prevent fraud offence represents a significant development in the UK’s approach to tackling economic crime by placing a stronger emphasis on fraud prevention within organisations.

The new offence reflects a broader shift in the regulatory landscape. Rather than focusing solely on detecting and prosecuting wrongdoing after it occurs, the legislation encourages organisations to take proactive steps to understand and mitigate fraud risks before they arise.

ICAEW’s new resource, Failure to prevent fraud: steps to compliance, is designed to help members interpret these requirements and translate them into practical actions within real organisations.

Importantly, ICAEW’s advice does not replace the official guidance issued by the UK Home Office, which is the only guidance with statutory weight under the legislation. Instead, ICAEW’s support complements the government material by providing a practical framework that members and organisations can use when thinking about fraud prevention and control.

A new corporate offence

The failure to prevent fraud offence applies where a fraud is committed by a person associated with an organisation and that fraud is intended to benefit the organisation or a person to whom the associated person provides services on its behalf.

If such a fraud occurs, the organisation may be criminally liable unless it can demonstrate that it had reasonable procedures in place to prevent fraud.

The offence applies to large organisations, defined as those meeting at least two of the following criteria:

• more than 250 employees;
• a turnover of more than £36m; or
• total assets of more than £18m.

The legislation covers a range of underlying fraud offences, including fraud by false representation, fraud by abuse of position and fraudulent accounting.

Although the offence formally applies only to large organisations, its effects are likely to be felt more widely. Many smaller organisations may encounter new expectations around fraud prevention through contractual relationships, supply chains or governance arrangements imposed by larger entities seeking to demonstrate compliance.

A practical framework for fraud prevention

While the legislation establishes the legal framework, organisations must decide how to translate its principles into workable systems and processes. ICAEW’s practical advice is intended to help bridge that gap by offering a structured way for organisations to think about fraud prevention.

In particular, ICAEW's steps to compliance highlight how organisations can approach fraud risk in a systematic way, including:

• identifying where fraud risks may arise,
• reviewing existing controls, and
• ensuring that responsibilities for fraud prevention are clearly understood across the organisation.

By presenting these issues in a practical and accessible format, ICAEW aims to help organisations move beyond viewing the offence simply as a legal obligation.

Mike Miller, ICAEW’s Economic Crime Manager and the author of the guide, explains: “We believe this is an opportunity for organisations to strengthen governance and internal controls.

“The exercise of reviewing fraud prevention procedures may also reveal broader improvements that can be made to financial oversight, internal reporting lines and organisational culture.”

The role of chartered accountants

Chartered accountants and finance professionals are likely to play a central role in helping organisations respond to the new offence. Many of the measures that support fraud prevention – including internal controls, financial monitoring and risk assessment – fall squarely within their professional expertise.

“In practice, this may involve helping organisations evaluate existing control environments, identify areas where fraud risks could arise and develop procedures that reduce opportunities for misconduct,” says Miller.

Chartered accountants may also support boards, audit committees and senior management in understanding their responsibilities and embedding fraud risk considerations into wider governance arrangements.

The offence also highlights the importance of organisational culture, according to Miller. He says: “Effective fraud prevention is rarely achieved through controls alone; it also depends on clear ethical expectations, staff awareness and accessible reporting channels for concerns.”

Supporting members and organisations

ICAEW's advice is designed to help members engage constructively with clients and employers as the new offence becomes embedded in practice. Miller explains: “By setting out key considerations and offering a structured approach to fraud prevention, our new resource provides firms with a practical starting point for strengthening their arrangements.”

In this sense, the advice is not simply about compliance. Instead, it offers a practical framework that organisations can use to review and improve their fraud prevention procedures, helping them demonstrate that they have taken reasonable steps to manage fraud risk.

While the statutory framework ultimately rests on the Home Office guidance, ICAEW’s advice aims to give members and organisations the tools they need to apply those principles in practice.

Miller says: “As the UK continues to strengthen its response to economic crime, accountants will remain central to helping businesses build resilient control environments and maintain trust in financial systems.”

The publication of ICAEW’s Failure to prevent fraud: steps to compliance comes as the government launched its new Fraud Strategy 2026-2029.

“The strategy identifies three pillars – disrupt, safeguard and respond – as being central to tackling the pervasive challenge of fraud,” explains Miller. “The ‘failure to prevent fraud’ offence and the supporting material published by ICAEW supports this strategy.”

• Access Failure to prevent fraud: steps to compliance