The UK’s new corporate fraud offence has taken effect today, exposing large organisations to criminal liability if they do not put in place adequate measures to stop staff or agents committing fraud for corporate benefit.

The provision, known as Failure to Prevent Fraud, was introduced under the Economic Crime and Corporate Transparency Act 2023, which aims to strengthen the country’s corporate fraud framework. The offence applies to large companies and partnerships as defined in government rules and creates a strict liability offence: if a person associated with the organisation commits fraud for its benefit, the organisation itself is guilty unless it can demonstrate it had “reasonable and proportionate” controls in place.

Law firm Dentons has warned that many businesses remain underprepared. After speaking with companies and reviewing industry feedback between February and June this year, Dentons found widespread gaps in readiness. As at June 2025, three in ten organisations surveyed had not appointed anyone to oversee FTP compliance, it said. Among the majority that had taken some steps, most had delegated the responsibility to already stretched compliance teams. Almost eight in ten had either not completed or not started a fraud risk assessment, which is a critical element of the government’s prescribed reasonable procedures.

Dentons said many sectors including finance, real estate and construction continued to report limited progress even into August. Competing demands on compliance functions appear to have slowed preparations.

According to Sarah Partridge-Smith, counsel and fraud specialist at Dentons, the change represents one of the most significant shifts in corporate fraud enforcement in recent years.

“The introduction of FTP marks a significant shift in the UK’s corporate fraud landscape. It is a strict liability offence, meaning companies will not be able to rely on good intentions or retrospective justifications in place of robust, proportionate and bespoke fraud prevention measures," she said. "Our data shows that there is still a lack of preparation across industry, which is understandable given today’s competing compliance workload. However, with the offence coming into force on 1st September, there is now an urgent need for in-scope firms to ensure that they are sufficiently protected.”

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