Rachel Warren writes for Solicitors Journal on the new failure prevent fraud offence
The clock is ticking… in three months, the prevention of fraud offence comes into force.
This new offence has been introduced by the Economic Crime and Corporate Transparency Act 2023 and becomes effective on 1 September 2025. As from that date, where an associated person commits a fraud intending to benefit an organisation or, in some circumstances, its client, that organisation could be convicted for a failure to prevent the fraud unless it can show it had reasonable preventative procedures in place.
In an article for Solicitors Journal, Rachel Warren, Legal Director, guides us through the examples set out in the government guidance related to the new failure prevent fraud offence.
The first example sets out a scenario where an investment fund promotes an investment in a sustainable timber business. In fact, the timber does not come from a sustainable source and the environmental credentials have been falsified. The person at the investment fund who put together the brochure for potential investors which contained this information is aware it is untrue. The underlying fraud by the individual will be fraud by false representation. However, the investment fund may also be prosecuted under the new offence if it did not have sufficient procedures in place to prevent the fraud. In fact, it may be prosecuted even if no-one relied on the misrepresentation to invest, because the intent to benefit the investment fund will be sufficient in itself.
Read the full piece in Solicitors Journal here.
