New measures to tackle fraud, including the new corporate criminal offence of failing to prevent fraud, have come into effect today.

The Government said the new laws, which have been designed to drive an anti-fraud culture and improve business confidence, will hold large organisations accountable if they profit from fraud.

The new measures have been introduced after the Office for National Statistics revealed that fraud offences increased by 31% last year.

The offence will hold organisations criminally liable if an employee, agent, subsidiary or other associated person commits fraud with the intention of benefiting the organisation.

Examples include dishonest sales practices, hiding important information from consumers or investors, and dishonest practices in financial markets.

In the event of prosecution, an organisation will now have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time the fraud was committed.

Fraud minister, Lord Hanson, said: "Today marks a pivotal moment for businesses, and this new offence strengthens our anti-fraud culture to protect businesses, build corporate trust, and support long-term economic growth, a cornerstone of this Government’s Plan for Change.

"I look forward to continuing our work with partners, as we publish our new, expanded fraud strategy, which places fraud against business at its heart."

Head of regulatory policy and compliance at PIMFA, Alexandra Roberts, said that the offence "marks a significant shift in emphasis around fraud".

She added that the onus is now on firms to demonstrate they have robust internal systems and staff training in place to prevent fraud.

Although the association welcomed the introduction of the new offence, it has called on the Government to provide greater clarity around what constitutes reasonable procedures to help firms avoid being prosecuted.

Roberts concluded: "The days where firms could deal with fraud on a purely reactive basis are now long gone, as the new offence compels firms to take a proactive approach to mitigating fraud risk within their organisations. The offence also forces firms to consider outward fraud, where the firms is the beneficiary, as well as inward fraud, where the firm is the victim.

"Since the offence was first announced back in 2023 as part of the ECCT Act, firms have scrambled to conduct risk assessments and compliance enhancement projects. This reflects how the offence will ultimately lead to better outcomes around fraud, with firms being better prepared to prevent it."

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