Failure To Prevent Fraud

Jonathan is a leading barrister and compliance expert specialising in financial crime and ESG compliance. With two decades of experience advising global businesses and holding senior roles at GlaxoSmithKline and Tesco, he brings practical, technology-driven solutions to complex compliance challenges.

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The Economic Crime and Corporate Transparency Act 2023 introduced a game-changing "failure to prevent fraud" offence that puts UK organisations directly in the firing line. This isn't just another compliance box to tick – it's a fundamental shift that makes large organisations criminally liable when their people commit fraud, even without their knowledge. ‍

Module 1: The New Corporate Crime That Changes Everything

Understanding When Your Organisation Becomes Criminally Liable

The Legal Earthquake 1^st September 2025 brings a game-changing new offence under the Economic Crime and Corporate Transparency Act 2023. For the first time, large organisations face unlimited fines for fraud committed by their people -even when they had no knowledge it was happening.

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‍What You'll Master:

Who's in the Firing Line? The Nine Routes to Corporate Crime

• Fraud Act 2006 offences - False representation, failure to disclose, abuse of position
• Theft Act violations - False accounting and director misconduct that triggers corporate     liability
• Companies Act breaches - When fraudulent trading becomes your organisation's crime
• The Aiding and Abetting Trap - How helping someone else's fraud makes you criminally liable

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The Associate Person Time Bomb

• Who counts as  "associated" - Employees, agents, contractors, and the crucial "providing     services" test
• The Benefit Test - Why fraud intended to help your clients or their subsidiaries     still makes you liable
• No Actual Benefit Required - How intention alone triggers criminal liability

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Real-World Scenarios That Shock ‍

Four detailed scenarios showing exactly how organisations become criminally liable:

• When helping your organisation triggers corporate crime
• How serving clients creates unexpected criminal liability
• When benefits to client subsidiaries still count
• When subsidiary fraud becomes parent company crime

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The Identification Doctrine Revolution

• How Parliament extended corporate criminal liability to senior management
• Why this dramatically increases your risk exposure
• What this means for your governance structures

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Module 2: Your Only Defence - Building "Reasonable Procedures"

The Complete Guide to Legal Protection

The Stark Reality

There defences to this strict liability offence are limited: proving you had "reasonable procedures" in place or that it was unreasonable to expect such procedures to be in place. This isn't about tick-box compliance -it's about building procedures that will convince a court you did everything reasonable to prevent fraud where it would be reasonable to be expected to put procedures in place.

The Six Principles That Save You:

Principle 1: Top Level Commitment

Why boards can't delegate this responsibility

• Governance structures that prosecutors respect - Clear roles, responsibilities, and accountability
• Communicating your anti-fraud stance - Making your commitment visible throughout the organisation
• Resource allocation that proves commitment - Putting your money where your mouth is
• Creating open culture - Encouraging speak-up without fear of retaliation
• Board-level oversight - Regular discussion and strategic integration

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Principle 2: Risk Assessment That Actually Works

The foundation of your entire defence

• The Three-Factor Framework - Opportunity, motive, and means analysis
• Two-Part Assessment Process - Identifying risks, then classifying by likelihood and impact
• Materiality Focus - Concentrating on risks that are both likely and impactful
• Documentation  Standards - Creating defensible evidence of your risk analysis
• The Fatal Flaw - Why lacking documented risk assessment destroys your defence

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Principle 3: Prevention Procedures That Bite

Building controls that actually prevent fraud

• Reducing Opportunity - Pre-employment checks, fraud impact assessments, procurement controls, robust sign-off processes
• Reducing Motive - Fixing incentive structures that encourage fraud, eliminating time pressures that drive corner-cutting
• Reducing Means - Strengthening due diligence, role-specific training, conflicts of interest procedures
• Detection Systems - Data-driven tools, encouraging speak-up, robust whistleblowing
• Proportionality Principle - Tailoring procedures to your business and sector

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Principle 4: Due Diligence That Detects

Risk-based approaches that work in practice

• Proportionate Due Diligence - Graduated approach based on actual risk
• When Enhanced  DD Becomes Essential - Recognising high-risk scenarios
• Documenting DD Decisions - Why choosing not to conduct due diligence must be justified
• Third-Party Risk Management - Agents, consultants, and service providers
• Ongoing Monitoring vs Periodic Review - Balancing thoroughness with practicality

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Principle 5: Communication That Changes Behaviour

Making sure everyone actually gets it

• Anti-Fraud Policy Development - Clear, accessible guidance that people follow
• Role-Specific Training Programmes - Tailored content based on individual risk exposure
• High-Risk Individual Focus - Special attention for procurement, finance, and sales teams
• Third-Party Training - Extending requirements to associated persons
• Whistleblowing Systems - Creating safe reporting channels that people trust
• Training Evaluation - Monitoring, reviewing, and measuring effectiveness

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Principle 6: Monitoring and Review That Evolves

Keeping your procedures current and effective

• Periodic Review Cycles - Systematic evaluation of procedure effectiveness
• Learning from Incidents - Updating procedures based on failures and near-misses
• External Benchmarking - Engaging with professional organisations and examining enforcement actions
• Trigger-Based Reviews - When criminal activity demands more robust procedures
• Continuous Improvement - Demonstrating ongoing commitment to fraud prevention

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Your Defence Strategy

• Documentation Requirements - What evidence you need to prove reasonable procedures
• Proportionality in Practice - Tailoring your approach to your business reality
• Integration Opportunities - Building on existing compliance frameworks
• The "Not Reasonable to Expect" Exception - When no procedures might be acceptable

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What You'll Achieve

By completing this course, you'll be able to:

✅ Navigate the new legal landscape - Understand exactly when and how criminal liability arises

✅ Build bulletproof defences - Implement "reasonable procedures" that provide complete legal protection

✅ Conduct effective fraud risk assessments - Systematically identify and prioritise your vulnerabilities

✅ Create genuine fraud-aware culture - Establish commitment that cascades throughout your organisation

✅ Prepare for enforcement - Understand penalties and ready your business for potential scrutiny

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Master the law before it masters you. 1st September 2025 is coming - be ready.

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