On 1 September 2025, a major expansion to corporate criminal liability will come into force under the Economic Crime and Corporate Transparency Act (ECCTA). Under the new Failure to Prevent Fraud offence, large organisations can be held criminally liable should one of their ‘associated persons’ commit fraud for the organisation’s benefit unless the company had in place reasonable procedures to prevent fraud. Our Business Crime and Investigations team have published extensive resources and articles on the new offence.
With less than two weeks to go, the Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO) have again made clear their intentions to prosecute the offence as soon as it becomes available and have issued joint guidance on how the offence should be prosecuted (alongside the other significant corporate criminal offences such as the s.196 Senior Manager offence, which has been in force since December 2023). The guidance ensures the authorities are fully equipped to pursue enforcement under the new law.
The full guidance is available here, and we set out some key takeaways below.
Public interest factors in charging corporates
Should there be sufficient evidence to present a realistic prospect of conviction (the Evidential stage), prosecutors then ask themselves whether prosecution is in the public interest before deciding whether or not to charge. The new guidance sets out a list of factors in favour of and indicating against prosecution, regarding the new Failure to Prevent Fraud offence:
Factors favouring prosecution include:
- repeat or ongoing misconduct
- offending as part of established business practices
- ineffective or ignored compliance programmes
- failure to report wrongdoing timely or fully
- significant harm to victims, markets or public trust
Factors against prosecution include:
- proactive self-reporting and remedial actions
- no history of prior misconduct
- effective compliance programmes
- availability of civil or regulatory alternatives
- isolated wrongdoing by specific individuals (e.g. a rogue actor)
- old offences with significant corporate change since
- any conviction that would cause disproportionate harm, such as mandatory debarment under the new Procurement Act 2023
- the organisation is in the process of winding up
Meaning of ‘associated person’
The guidance provides more detail on the interpretation of an ‘associated person’ for the purposes of the new offence. It will be a crucial element to assess, as who is ‘associated with’ a company will determine whose actions a company can be held liable for.
The guidance suggests:
- The test is “purposive rather than formal” turning on the “nature of the relationship in practice” and whether “the individual was… performing services for or on behalf of the organisation, irrespective of their contractual status or title.”
- The definition of ‘associated person’, although present in bribery and tax evasion contexts too, will have its own individual statutory meaning.
Reasonable procedures
The guidance references requirements on companies, as is the case under all ‘failure to prevent’ offences, including the new Failure to Prevent Fraud offence, to have in place ‘adequate’ or ‘reasonable’ prevention procedures.
The guidance emphasises:
- The six core principles contained within issued government guidance will guide law enforcement interviews, assist them in identifying lines of inquiry and inform prosecutors’ assessment of the strengths and weaknesses of any claimed defence of ‘adequate or reasonable procedures’.
- Prosecutors may wish to consider an appropriate witness adducing the relevant government guidance to assist any jury with understanding the statutory defence.
How can we help you prepare?
Our team at Capital comprises former SFO prosecutors and investigators, and is uniquely positioned to advise on ensuring your business is ready for the new offence, providing practical insight from our experience in law enforcement.
We are hosting two free, in-person breakfast briefings to talk this through, in both Cardiff and London in September. Sign up below to find out more. We hope to see you there!
Cardiff on 10 September 2025
London on 17 September 2025
