ECCTA: Firms Urged to Prepare for New Corporate Fraud Offence with 1 Month to Go
With only weeks remaining before a major legal change takes effect, large organizations across the UK are being advised to review their fraud avoidance procedures so as to avoid criminal responsibility under the new guidelines of corporate crime.
From September 1, 2025, a new offence under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) will make it a criminal act for large organisations to fail to prevent fraud committed by individuals associated with them. The upcoming changes represent one of the most significant updates to corporate criminal law in over a decade.
New Corporate Crime Rules Explained
The new law creates a strict liability offence against organisations failing to prevent employee, agent, subsidiary, or other individuals acting on behalf of an organisation fraud, where the fraud is for the benefit of the organisation or customers of the organisation.
The legislation will cover any organisation which is considered “large”, i.e., meets two or more of the following criteria: turnover of £36 million or more, total assets of £18 million or more, or 250 people or more. In the case of parent companies, the combined figures for all of the subsidiaries will be used.
Most importantly, even smaller subsidiaries within larger corporate groups can fall within the scope of the offence, subject to structure and inter-relationship.
No Grace Period & High Expectations
There won’t be any period of transition when the regulations come into force, so businesses must be completely prepared by the September 1 deadline. The government has released a guide to alert businesses to what they have to do, such as the use of a “reasonable procedures” defence.
In order to plead this defence, organisations must be able to demonstrate that they had in place anti-fraud controls appropriate to their organization. This is done by taking documented fraud risk assessments, revamping internal controls and putting policies in place that employees know and work.
Legal experts have said that the guidance is intentionally broad, allowing organisations to think of measures that fit their respective operations. This is also placing greater responsibility on companies to assess whether their current controls are adequate or if they need to be reinforced.
Enforcement Expected to Be Strong
The new legislation has been widely viewed as a significant boost to the enforcement powers of the Serious Fraud Office and other probe agencies. Authorities have publicly signaled an intent to pursue cases when the offence becomes active.
This strong approach will likely prompt firms to act quickly, especially as enforcement agencies intensify the battle against serious economic crime. Industry observers believe that early enforcement action could be used to serve as a deterrent and remind of expectations for compliance.
Conclusion
As the deadline approaches, larger companies should not wait until the last minute to review their fraud risk management approach. This may include internal audit, reminder training sessions, and maintaining whistleblowing mechanisms. Those that do not have a clear fraud prevention plan might find themselves especially vulnerable.
As economic crime continues to be a real threat, the ECCTA is a step towards more responsibility in business management. Anticipating now could enable firms to stay ahead of potential legal and reputational consequences.
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