Failure to Prevent Fraud Offence

Compliance Deadline: September 1st, 2025

Who It Applies To:

The legislation applies not only to organisations based in the UK but also to foreign organisations with employees or victims in the UK, which must consider its potential impact.

Potential Non-Compliance Impacts:

Non-compliance could lead to unlimited fines, legal exposure, and irreparable reputational damage.

Key Compliance Principles

To comply, organisations must demonstrate reasonable fraud prevention procedures. The UK government published guidance on November 6, 2024, emphasizing six core principles for compliance.

1. Risk assesssment

Identify and address key fraud risks

2. Proportional monitoring

Align measures with organisational size and complexity

3. Top-level commitment

Leadership must actively support anti-fraud efforts

4. Due diligence

Vet employees, agents, and third parties thoroughly

5. Communication & training

Embed fraud prevention into company culture

6. Monitoring & review

Continuously improve fraud controls

The Challenges of Compliance:

1. Regulatory pressure:

Scrutiny and severe penalties for non-compliance

2. Insider fraud complexity:

Detecting subtle fraud patterns among routine actions

3. Resource limitations:

Budget and expertise constraints

4. Transparency demands:

Need for clear records of prevention measures

Insider Threat Technology Benefits:

Insider threat technology is no longer optional - it’s essential. The guidance under the Failure to Prevent Fraud offence highlights technology as a critical enabler of effective fraud defences.