Corporate Fraud Liability and Anti-Fraud Enforcement

Imagine a mid-sized UK manufacturer discovering that a rogue salesperson’s fake invoices have put the entire company at risk, not just reputationally, but criminally. From 1 September 2025, strict new liability regulations apply. Businesses must demonstrate they have reasonable fraud-prevention procedures in place or face unlimited fines and prosecution. This is a radical alteration in perspective and means that compliance is no longer confined to the boardroom, it stretches across every desk and into every inbox.

The Regulatory Earthquake

“When ignorance isn’t a defence”…. that’s the seismic shift at the heart of the UK’s new failure to prevent fraud offence, brought in by the Economic Crime and Corporate Transparency Act 2023. From 1 September 2025, large organisations, including multinationals with UK links, face strict liability if an “associated person” (such as an employee or agent) commits fraud for the firm’s benefit, regardless of senior management’s knowledge of the conduct, or otherwise.

This marks a progression from earlier “failure to prevent” statutes in bribery and tax evasion, echoing the Bribery Act 2010. It now goes further into uncharted waters by encompassing the full breadth of fraud offences.

Meanwhile, across the Channel, the EU is ramping up accountability through the Corporate Sustainability Due Diligence Directive (CSDDD), mandating businesses to identify and mitigate human-rights and environmental risks across their value chains, and the EU Whistleblower Directive, designed to protect individuals exposing wrongdoing and boost enforcement transparency.

In essence, firms can no longer claim ignorance. It’s time to proactively embed anti-fraud defences across the entire business.

Why This Matters Now

In the wake of COVID-19 and amid lingering economic uncertainty, fraud has surged to epidemic levels, accounting for a staggering 40–41% of all crimes in the UK, with a 31 per cent rise in incidents to approximately 4.2 million in the year ending March 2025  according to the Office for National Statistics. Digital fraud continues to proliferate: remote purchase scams alone totalled nearly 2.6 million cases in 2024, with over £1.2 billion lost.

Regulators face mounting pressure from consumers, investors and governments to clamp down hard. The UK’s Financial Conduct Authority (FCA) now screens some 100,000 websites daily, removing misleading financial promotions, while alerting consumers more proactively. Meanwhile, the Serious Fraud Office (SFO) is bolstering cross-border enforcement, freezing crypto-assets for the first time and stepping up investigations into large-scale frauds.

Firms that once relied on ignorance of wrongdoing among executives are no longer safe. The law now demands proof of proactive, effective anti-fraud measures across the board.

The Cultural Shift: From Box-Ticking to DNA

Once, anti-fraud strategies involved dusty policy binders and obligatory annual e-learning modules; compliance as rote exercise. Now, a vivid cultural transformation is underway. Firms are increasingly recognising that sustainable fraud prevention must be woven into the very fabric of their organisation, its DNA.

Behavioural economics is playing a surprising starring role in this. Companies are drawing on psychological insights to design controls that reduce temptation and nudge honest choices, rather like the UK’s Behavioural Insights Team applies “nudge” principles to public policy. Meanwhile, real-time AI and predictive analytics offer powerful eyes and ears, with tools like the software firm Quantexa enabling businesses to spot intricate fraud networks by linking disparate data points, and modelling anomalies before fraud strikes.

Crucially, the emphasis has shifted: it’s no longer “tone from the top” alone… now, middle managers are the vital front line. Empowered, alert and accountable, they bridge the gap between policy and practice and ensure that anti-fraud vigilance lives in every team, not just at board level.

Enforcement and Ever-closer Scrutiny

With fraud enforcement now firmly in sight, regulators are harnessing unprecedented cross-border coordination. The UK’s SFO collaborates closely with Europol and the European Public Prosecutor’s Office (EPPO), enabling more agile, joined-up responses to multi-jurisdictional fraud, particularly those targeting the EU’s financial interests.

Enforcement is no longer theoretical. Deferred Prosecution Agreements (DPAs) have become a cornerstone of corporate accountability, exemplified by the Airbus DPA, the UK’s largest to date at nearly €991 million, stemming from a collaboration between the SFO and French prosecutors. Regulators now assess not just the presence of...

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