Employer Responsibilities Under the Failure to Prevent Fraud Offence

The UK’s Failure to Prevent Fraud offence, introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), has now come into force - and it marks one of the most significant changes in employer liability in recent years.

The law is designed to hold businesses accountable if employees, contractors, or other associated persons commit fraud for the organisation’s benefit. Crucially, companies can be prosecuted even if senior leaders had no knowledge of the fraud. The only defence? Being able to show that "reasonable procedures" were in place to prevent it.

Why does this matter to employers?

Fraud isn’t just a financial issue - it’s a reputational and legal one. In the eyes of regulators, turning a blind eye or failing to take preventative steps is no longer acceptable.

This means employers of all sizes need to take immediate action to ensure they’re protected.

What employers should be doing now:

• Strengthen policies and procedures

  Generic codes of conduct will not be enough. Employers need detailed, practical anti-fraud policies tailored to the risks in their sector.

• Train employees and managers

  Awareness is critical. Employees must be able to recognise fraudulent behaviour, understand reporting channels, and feel safe raising concerns.

• Conduct regular risk assessments

  High-risk areas such as procurement, expenses, and sales processes should be reviewed regularly to spot vulnerabilities.

• Establish effective whistleblowing frameworks

  Confidential and trusted reporting systems are essential. If staff fear retaliation, issues will remain hidden.

The risks of doing nothing

Employers who fail to act face serious consequences - financial penalties, legal exposure, and long-term damage to their reputation. For many businesses, a single fraud case could threaten their survival.

How DCG can help

At DCG, we help organisations reduce risk and stay compliant by:

• Reviewing and strengthening existing policies and internal controls

• Delivering practical fraud awareness training

• Setting up whistleblowing channels that employees trust

• Supporting leadership teams in embedding a transparent culture

The message is clear: prevention is no longer optional. Employers who prepare now will not only stay on the right side of the law but will also build trust with employees, customers, and stakeholders.