Failure to Prevent Fraud Offence Solicitors

The UK government has created a new offence called ‘failure to prevent fraud’. This seeks to make large organisations liable when an employee commits fraud in a way that benefits the business, if they have not taken suitable steps to prevent it.

This means that businesses will soon have a legal obligation to tackle fraud committed by employees, and that a failure to do so could have serious legal consequences for any organisation. However, at this time, there is a lack of clarity on businesses’ responsibilities under this new legislation, and the role they must play in combating fraudulent trading or activity.

What is clear is that, when the law goes into effect, organisations must take care to prevent fraud in whatever ways they can. As an employer, if you do not implement fraud control policies and an employee commits a specified fraud offence that benefits your business, you may be found liable for failing to prevent this fraudulent activity.

If you are concerned about the new offence and your company’s ability to effectively prevent fraud, speak to the team at JMW Solicitors. Our experts have been closely following the development of this legislation, and as a result, we are well-placed to offer advice. We have extensive knowledge of this area of the law and a track record of success in defending businesses during investigations into fraudulent conduct.

Contact us on 0345 872 6666 for advice tailored to your circumstances, or use our online enquiry form to request a call back at a time that is convenient for you.

Why Choose JMW?

JMW Solicitors' business crime team has many years of combined experience representing organisations and individuals accused of fraud offences. The care and thoroughness with which we prepare means that we can help you to build the strongest possible defence, based on the specific details of your case.

We can also represent business owners who suspect employees of fraudulent activities to launch internal investigations. This could help organisations to meet their obligations to the law, and offer an opportunity to strengthen their fraud prevention policies.

Our team is extremely engaged with changes in the law and has been monitoring the development of this legislation carefully. This means that we will be fully ready to advise businesses from the moment that the law is enacted and the new offence goes into effect. This will also keep us ahead of any proposed changes or amendments, putting us in the best possible position to provide the valuable advice that businesses need.

Thanks to our experience working on many complex cases, we can also provide any legal services you need that are related to your case. This might include representation in interviews with the investigating authority.

How can businesses avoid a failure to prevent fraud charge?

The new legislation gives businesses specific responsibilities for preventing fraud, the foremost of which is to implement additional oversight and compliance procedures. As yet, the law does not clarify what those procedures should be or what will be considered a reasonable attempt to prevent fraud, but organisations can prepare by being proactive.

The first step should be to conduct risk assessments and identify any areas of your business where there are gaps in oversight or where there is a risk of fraudulent activity.

There are several common types of fraud that may involve corporations, such as:

• Fraud by false representation
• Payroll fraud
• Conspiracy to commit fraud
• False accounting
• Insider dealing and market abuse

As such, areas like your payroll management and accounting procedures should be placed under the most scrutiny to ensure that you comply with the law and that there is no risk of fraudulent activity taking place.

Once you have carried out your risk assessment, close gaps in oversight and ensure that you have full visibility of the financial transactions your organisation is making. This is a business owner’s responsibility under any circumstances, but there may now be legal penalties if you fail to do so and enable fraud to occur through inaction.

FAQ About the Failure to Prevent Fraud Offence

What fraud prevention measures should organisations introduce?

Currently, there is no government guidance on the types of fraud prevention activities organisations should undertake. However, the law includes an amendment that gives the government a statutory duty to publish guidance on this subject. At the point that the new offence is enacted into law, we expect government guidance to make the requirements for organisations clear in this regard.