Failure to Prevent Fraud – Support from Criminal Fraud Solicitors
Why You Need Criminal Fraud Solicitors on Your Side
Section 199 of the Economic Crime and Corporate Transparency Act 2023 creates a new offence of failing to prevent fraud.
The new offence of failure to prevent fraud is intended to mirror the existing offences of failure to prevent bribery and failure to prevent the criminal facilitation of tax evasion, which are contained in sections 7, 8, and 9 of the Bribery Act 2010 (BA 2010) and Part 3 of the Criminal Finances Act 2017 (CFA 2017), respectively.
The offence will apply where the fraud is committed by an employee or associate of the organisation with a view to benefiting the organisation, or any person to whom the person provides a service on behalf of the organisation.
Does this offence apply to all companies?
The offence will only apply to large organisations as defined by reference to their turnover, balance sheet total and number of employees.
A relevant body is a “large organisation” only if the body satisfied two or more of the following conditions in the financial year of the body (“year P”) that precedes the year of the fraud offence:
- Turnover More than £36 million
- Balance Sheet Total More than £18 million
- Number of Employees More than 250
Are any defences available?
A defence would be available where “reasonable procedures” for the prevention of fraud have been implemented by the organisation (thus mirroring the approach taken in the CFA 2017 for failure to prevent the facilitation of tax evasion), with provision that in some circumstances it may be reasonable for no such procedures to be in place.
The statutory defence in the Bribery Act 2010 (BA 2010) (failure to prevent bribery) refers to “adequate procedures” but this has been interpreted as meaning no more than “reasonable in all the circumstances” in other words, equivalent to ‘reasonable procedures’.
The Government has published guidance as to what procedures might properly be expected to be in place and have outlined six principles that should be followed;
- Top level commitment
- Risk assessment
- Proportionate risk-based prevention procedures
- Due diligence
- Communication (including training)
- Monitoring and review
According to the guidance, ‘These principles are intended to be flexible and outcome-focussed, allowing for the huge variety of circumstances that relevant bodies find themselves in’ and ‘Procedures to prevent fraud should be proportionate to the risk’.
The burden of proving that the organisation had put in place reasonable prevention procedures, or that it was reasonable not to have any such procedures, will lie with the organisation.
What is the maximum sentence if the company is convicted?
If convicted, an organisation could receive an unlimited fine, which could run into many millions of pounds for the largest firms.
Conclusion
In conclusion, your organisation will benefit immensely from engaging criminal fraud solicitors – experts who can guide you proactively, protect your interests, and defend robustly through every stage.
At JFH Crime, our dedicated team provides clear advice from the very first investigation, support during interviews under caution, careful review of evidence, and skilled representation in court.
Whether you are facing complex financial allegations, corporate fraud issues, or benefit fraud investigations, we ensure you receive strategic, specialist defence tailored to your circumstances.
Contact Us Today for Help
If you need specialist advice in relation to any criminal investigation or prosecution, from the initial investigation through to court proceedings, let us help by getting in touch.
Frequently Asked Questions
What is a criminal fraud offence?
Criminal fraud offences cover a range of deceptive or dishonest acts such as making false representations, abusing position, false accounting, or benefit fraud.
JFH Crime’s specialists handle complex fraud cases involving false representations, VAT or income tax fraud, mortgage offences, advance fee frauds, computer frauds, credit card offences, identity fraud, insurance and pension frauds, and more.
What are the penalties for being accused of criminal fraud?
Penalties vary based on the type of fraud. For benefit fraud offences, for example, a dishonesty-related offence could lead to up to seven years’ imprisonment, while non-dishonesty cases may incur shorter sentences in the Magistrates’ Court.
their fraud types may result in hefty fines, imprisonment, confiscation orders, or court orders for unlawful profits.
How can our criminal fraud solicitors help?
Expert criminal fraud solicitors at JFH Crime guide you from investigation to resolution. They can:
- Advise and accompany you during interviews under caution
- Review large volumes of documents and challenge evidence or overpayment calculations
- Identify defences and negotiate outcomes which can potentially help to reduce sentences or avoid prosecution
- Represent you through court proceedings, often with legal aid or clear private fee arrangements
What evidence is required to prove fraud?
Typically, fraud must be established through proof of dishonest false representations, knowing concealment, or abuse of position.
Evidence may include documents, financial records, witness statements, or forensic analysis. This is especially important in complex frauds like VAT evasion, false accounting or identity fraud.
JFH Crime partners with forensic accountants and data analysts to scrutinise this evidence effectively.
What are the three types of frauds?
While there are many types of fraud, they are often categorised as:
- Benefit fraud – e.g. dishonestly claiming benefits or failing to report changes
- Social housing fraud – e.g. unlawful subletting or misrepresentation in tenancy
- Corporate and financial fraud – e.g., false accounting, VAT/income tax evasion, advance fee or banking fraud
