Fraud is no longer a niche issue reserved for financial headlines or courtroom dramas. It’s an economic epidemic. According to the House of Commons Library, in 2024, nearly £1.2 billion was stolen through fraud in the UK alone, and 41% of all reported crimes were fraud related. That’s not just a red flag – it’s a siren.
The scale of the problem is hard to ignore. The Crime Survey for England and Wales reported a 19% increase in fraud incidents, bringing the annual total to nearly 3.9 million cases. Meanwhile, the National Crime Agency (NCA) estimates that over £100 billion is laundered yearly through the UK or UK corporate entities. For context, that’s more than the UK spends annually on education.
And it’s not just public money or personal savings at risk. The ACFE 2024 Report to the Nations estimates that the average organization loses 5% of its annual revenue to fraud. That’s not a typo. It’s a painful truth for businesses and a call to action.
A new era of accountability
The UK government is introducing sweeping reforms to address the fraud crisis through a new Economic Crime and Corporate Transparency Act, which received Royal Assent on October 26, 2023. Guidance was issued in November 2024, and the Act comes into full effect on 1 September 2025.
The purpose? Bold but straightforward: Strengthen the UK’s response to economic crime and improve transparency.
The law includes key measures such as:
- A new “Failure to Prevent Fraud” offense
- Enhanced corporate liability
- Improved information sharing
- A limited partnership overhaul
- Major Companies House reforms
What’s changing?
Historically, fraud prosecutions have failed too often, particularly when holding large organizations accountable. The government recognized this imbalance and asked the Law Commission how to level the playing field. The result? A clear shift from intent-based prosecution to strict liability.
Under Section 2 of the new Act, organizations will now be liable if someone associated with them (employees, subsidiaries, or those acting on their behalf) commits fraud for their benefit – regardless of whether the organization knew about it. You read that correctly, too: no intent, no knowledge required – all that matters is whether the company gained from the fraud.
There is a defense, but it’s tough. You must prove your organization had “reasonable” fraud prevention procedures in place. Think of it as a corporate seatbelt. You don’t purposely crash your car but are still expected to wear one.
Who needs to act?
The ECCTA applies to large organizations operating in or benefiting from the UK – even if company headquarters are overseas. The new jurisdictional reach is intentionally broad, ensuring UK-linked fraud doesn’t slip through international loopholes.
This isn’t just a finance department problem, either. One of the biggest takeaways from recent NAVEX client conversations is that many organizations had never considered benefiting from fraud. It’s time to expand the risk lens: this affects sales, operations, procurement, compliance and more.
Where to start with ECCTA compliance?
The new official guidance outlines six steps every business should follow:
- Top-level commitment – Senior leadership needs to champion fraud prevention actively
- Risk assessment – Identify where fraud could realistically occur
- Proportionate procedures – Put controls in place that reflect the risk
- Due diligence – Know who you’re dealing with
- Communication and training – Ensure staff understand and can act on policies
- Monitoring and review – Regularly test and improve your defenses
Don’t panic; many organizations already have procedures for other “failure to prevent” offences (e.g., bribery or tax evasion). The key question is: Can they be adapted? In many cases, yes, and a readiness assessment is the first step.
Fraud prevention is no longer optional
This Act marks a significant turning point. From September 2025, claiming ignorance is not sufficient. You could be liable if your organization benefits from fraud, even unintentionally, and you don’t have proper prevention procedures.
The goal isn’t just to punish. It’s to create a safer, more transparent UK business environment. But with only months to go, the clock is ticking.
It’s time to act. Strengthen your fraud defenses before the law makes it mandatory.
Discover more about how NAVEX risk and compliance solutions can help you to remain compliant with the ECCTA and other global regulations.
