Companies face prosecution risk as new fraud law comes into force

03 Sep 2025

Companies could be prosecuted and face unlimited fines if they fail to prevent fraud that their firm profits from under a new corporate offence.

The offence will hold large organisations to account if they profit from fraud. It forms part of wider measures introduced by the government to tackle fraud and protect the UK economy.

These have been introduced as part of the Economic Crime and Corporate Transparency Act (ECCT) 2023, which came into force on 1 September.

Under the new law, which was passed with cross-Parliament support, large organisations can be held criminally liable where an employee, agent, subsidiary, or other 'associated person' commits a fraud intending to benefit the organisation.

In the event of prosecution, an organisation will now have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time the fraud was committed.

Lucy Rigby KC MP, the Solicitor General, said: 'Fraud undermines our British values of fairness and playing by the rules. It hurts individuals and businesses, and harms business confidence.

'This new legislation sends a clear message that large organisations must take responsibility for preventing fraud, and those that fail to do so will be prosecuted with the full force of the law.

'This government is committed to protecting our economy and we're determined that those who don't play by the rules will be brought to book.'