Fraud and financial crime are ubiquitous. In the UK, financial crime is now seen as a major risk for UK businesses and the UK economy. According to the KPMG UK’s Fraud Barometer, the total volume of alleged fraud cases £100,000 or above heard in UK courts reached 226 in 2023, an increase on the previous year's total of 221 – although the total value decreased slightly from £1.12bn to £992.9 million.
Concerns remain about the level of fraud in the UK, both in the public and private sectors – although Home Office figures indicate that fraud accounts for more than 40% of crime, it receives less than 1% of police resources nationwide.
The UK is also making radical reforms to fraud law, including the liability of corporates and their directors. The Economic Crime and Corporate Transparency Act 2023, introduced an offence which means that a company that meets certain size criteria will be guilty of an offence if it has “Failed To Prevent” certain criminal conduct of an employee, agent or subsidiary (including fraud, false accounting and others), as long as the intent of the perpetrator is to benefit the company. This will come into force on 1 September 2025.
The same legislation now makes it easier to prosecute organisations generally (not just for fraud), by locating the relevant mental states lower in the corporate structure, among “Senior Managers”. Seniority is a question of the de facto authority of the individual, rather than their job-title.
Depending on the offence a company could receive an unlimited fine, likely to be a multiple of relevant profits.
Corporates should be planning to put controls in place now which are designed to protect themselves against fraud and prevent employees or agents from breaching fraud law in the course of their work. Senior managers should be vetted and receive appropriate training to protect both themselves and the company.
