Tuesday 14th November, 2023
The Economic Crime and Corporate Transparency Act received Royal Assent last month and introduces UK authorities to proactively target organised criminals.
The new offence would make an organisation criminally liable if it failed to prevent fraud, even if it was unaware of the fraud being perpetrated.
The ‘Failure to Prevent Fraud’ offence will only apply to ‘large organisations’ who meet at least two of the following three criteria: Employ more than 250 staff, have in excess of £36 million turnover or more than £18 million in total assets.
Although those organisations falling outside of the scope will not be obliged by law to adhere to the legislation, we are suggesting that as best practice all organisations should look to embed the same approach to Prevent fraudulent activity. As a large organisation it may be best to ensure that your supply chain adopt a similar approach to minimise the risk. According to an article from PKF.
Companies House will receive enhanced abilities to verify the identities of company directors, remove fraudulent organisations from the company register and share information with criminal investigation agencies. According to a Government news release.
It is expected that this new offence will be effective by the end of 2024, following publication of government guidance.
Related blog: UK SOX-Lite Update