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An addition to the roster of corporate criminal offences in the UK

In brief

On 11 April 2023, the UK government announced in a Factsheet the introduction of a new criminal offence of failure to prevent fraud for organisations profiting from fraud committed by their employees or agents acting on their behalf. Violations can result in unlimited fines for organisations involved. Introduced as an amendment to the Economic Crime and Corporate Transparency Bill 2022, the new offence will come into force on the day the Act is passed.

The offence is applicable to all large corporations and partnerships operating across all sectors, wherever incorporated or formed. In addition to businesses, this includes large not-for-profit organisations such as charities, and incorporated public bodies. “Large organisations” is defined as satisfying two or more of the following conditions in the financial year preceding the year of the fraud offence: i) turnover of more than GBP 36 million; ii) balance sheet total of more than GBP 18 million; and iii) number of employees more than 250.

A defence to the offence is either (i) having in place prevention procedures as it was reasonable in all the circumstances to expect the body to have in place, or (ii) to demonstrate that it was not reasonable in all the circumstances to expect the body to have any prevention procedures in place. In scope businesses should undertake the necessary risk assessments to ensure that they have reasonable prevention procedures in place. 


The new offence follows on from recommendations made by the Law Commission’s review of corporate criminal liability in June 2022. Fraud accounts for a significant 41% of crime in the UK as of the year ending September 2022. In a bid to clamp down on financial crime, the UK government is introducing this offence as part of a set of measures to protect victims and drive a corporate cultural shift towards better fraud prevention. Its introduction is backed by the Serious Fraud Office and the Crown Prosecution Service. The Economic Crime and Corporate Transparency Bill 2022 has the overarching aims to combat economic crime and improve transparency over corporate entities. See our previous alert on the topic here.

In more detail: the offence

Applicable fraud offences

The specific fraud offences in the draft legislation are included in Schedule 10 of the Economic Crime and Corporate Transparency Bill 2022. The offence captures the following fraud and false accounting offences:

  • fraud by false representation 
  • fraud by failing to disclose information 
  • fraud by abuse of position
  • obtaining services dishonestly 
  • participation in a fraudulent business 
  • false statements by company directors 
  • false accounting 
  • fraudulent trading 
  • cheating the public revenue. 

In Scotland, the following common law offences would also apply: fraud, uttering; embezzlement.

The specified offences list will be reviewed after the offence comes into force and may be updated in the future. The Schedule listing the offences may be amended to add or remove an offence. For an offence to be added, it must be

  • an offence of dishonesty,
  • an offence that is otherwise of a similar character to those listed, or
  • a relevant money laundering offence (i.e., an offence under ss. 327 (concealing), 328 (arrangements), or 329 (acquisition, use and possession)).

An organisation’s benefit

A corporation will only be liable under this offence if a specified fraud offence is committed for its benefit.

The government has not yet released guidance on how a benefit will be defined and whether there will be separate offences for each benefit an organisation gains. It may be the case that this is left undefined under the offence and open to interpretation. 

Reasonable fraud prevention procedures

Whilst lack of knowledge will not be a defence, a reasonable procedures defence can be raised. The government will publish guidance on what constitutes reasonable procedures. In this regard it is useful to recall the government guidance issued for the other corporate criminal offences in the past (please see below).

Recommended actions 

What constitutes “reasonable procedure” is not defined by the draft legislation. This is similar to the other ‘failure to prevent’ offences. HMRC has published some guidance on what constitutes “reasonable procedures” in the context of the failure to prevent the facilitation of tax evasion known as the Corporate Criminal Offence (CCO) (link available here). This largely followed guidance issued by the UK Ministry of Justice on the failure to prevent bribery (the “Section 7 Offence“) (link available here) in relation to “adequate procedures” in respect of the UK Bribery Act 2010.  

The same six guiding principles of corporate compliance, which are relevant to the CCO and Section 7 Offence, are highly likely to also be applicable to the failure to prevent fraud offence: 

  • Risk assessment
  • Proportionality  
  • Top level commitment
  • Due Diligence
  • Communication (including training)
  • Monitoring and review.

As noted in our previous alert, as of January 2023 the UK had nine live CCO investigations and another 26 investigation opportunities under review, covering businesses sectors such as software providers, labour provision, transport, accountancy and legal services. Large organisations can prepare for the increase in corporate liability by undertaking risk assessments to ensure reasonable prevention procedures are in place. If you have more questions on the topic, please get in touch with a member of our team.


Jennifer Revis is a partner in Baker McKenzie's London office and co-leads our EMEA Customs Team.
Jennifer focuses her practice on the public regulation of international trade, particularly in a wide range of customs compliance issues. She regularly advises clients on import matters, including customs valuation, rules of origin, and classification. She has worked with clients designing and implementing their compliance programs, policies, procedures and risk assessments, and assisting them in customs audits. She has significant experience in managing global customs projects and disputes, particularly in the area of customs valuation (transfer pricing; assists; royalties). Jennifer also advises on FTAs and trade remedies matters.
Jennifer has been consistently recognised as a "Leading Individual" for Customs & Excise and “Next Generation Partner” for Trade, WTO Anti-Dumping And Customs. Clients describe her as "an outstanding customs lawyer and litigator with fantastic experience. She is also easy to work with and leads her team with aplomb", "without a doubt, one of the best customs lawyers in the business (…) with an exceptionally deep knowledge of customs valuation concepts, as well as considerable experience applying those concepts in a variety of jurisdictions."
Jennifer has been on secondment to the UK customs authorities (Her Majesty's Revenue and Customs) in their tax and excise litigation department and to the Firm's European Law Centre in Brussels.


Sunny Mann is a Partner in Baker McKenzie's London office and co-leads the UK Compliance and Investigations Practice, as well as the UK International Commercial and Trade Practice. Both these practices are ranked Tier 1 by Legal 500 UK. He has also worked in our Firm's Washington DC, New York and Sydney offices. Sunny also advises many clients on risk matters in India. He advises clients (including numerous FTSE 100 and Fortune 100 businesses) on compliance and investigations with respect to export controls, trade sanctions and anti-bribery rules. The Legal 500 ranked Sunny as a “Leading Practitioner", and as "excellent", with a ‘calm’ and "very practical" approach. The India Business Law Journal also noted that Sunny is "excellent and has deep experience in India". He is a Visiting Professor at the College of Europe, the leading institute for post-graduate European studies, where he teaches a course on Corporate Compliance.


Tristan Grimmer is a partner in Baker McKenzie's London office. He is a member of the Compliance & Investigations and the International Trade and Competition practice groups. Tristan joined the Firm as a trainee in March 2004, qualifying in March 2006. He has advised on parallel investigations by authorities in the United States, Switzerland, Brazil, Japan, and has spent time working in Baker McKenzie's Chicago office. Tristan was recently named as a "Next Generation Lawyer" in the UK Legal 500 2017 directory.


Rini joined Baker McKenzie after six years with the Canadian government, having worked on Brexit policy, as well in trade and tax litigation. She obtained her legal training with the Canadian government with the Trade Law Bureau and the Department of Justice. Her background in trade matters spans legal advisory, litigation and policy, having worked on free trade agreements, WTO litigation on market access and trade remedies issues. Prior to joining the Canadian government, she was a government affairs associate at one of Canada's most recognizable brands.


Henry is a partner in the Baker McKenzie Dispute Resolution team based in London, and a member of the Compliance and Investigations group. Henry is an English qualified solicitor. Henry also worked in the San Francisco office for an extended period and has been seconded to the litigation and regulatory investigations team of a well known bank. During his secondment, Henry played a leading role in the internal legal team on a number of high profile investigations and disputes. Henry has also been seconded to the UK Serious Fraud Office, during which he was the Case Lawyer on a high profile and significant multi million pound investigation.


Joanna Ludlam is co-chair of Baker McKenzie's Global Compliance & Investigations practice. She has held this position since 2017, having previously led this group in the EMEA region. She is a Partner in the Dispute Resolution team in the London office, where she leads the Regulatory, Public & Media law team. Joanna has extensive experience in leading complex investigations and pioneering compliance initiatives. She advises clients, including the C-suite, on corporate criminal liability, regulatory compliance, and crisis and reputation management. She also prepares senior executives for appearances at public inquiries and Parliamentary Select Committee hearings. Her expertise in administrative and public law and public procurement law complements her investigations practice. Joanna co-authored the firm's Connected Compliance thought leadership, which includes the world's first global compliance integration benchmarking tool. Joanna was the winner of the “Compliance Innovator of the Year for Connected Compliance” at the Women in Compliance Awards and the “Admin & Public UK Lawyer of the year” by ACQ5 in 2019. She was one of GIR's "Top 100 Women in Compliance” in 2018 and “Role Model in the HERoes Women Role Model Lists” in 2019. In 2016, Joanna made The Lawyer’s “Hot 100” and is consistently recognized by Chambers and Legal 500. Joanna designed the Firm’s innovative Investigations Academy, a comprehensive, state-of-the-art training programme for investigations practitioners within the Firm’s team and clients. She is also a member of the leadership team for BakerWomen, a key Baker McKenzie D&I focus group.


Mark heads the Financial Services & Regulatory (FSR) practice group in London and co-leads the FinTech group. He also acts as Chair of the FSR practice for the EMEA region and sits on the Global FSR Steering Committee. Mark is ranked as a Leading Individual in Legal 500 2022 for Financial Services (Non-Contentious Regulatory) and is individually ranked in Chambers 2022 for FinTech. He is described in these publications as being "very knowledgeable" and "very approachable" with "a wonderful range of FinTech experience" and as someone who is "clear, commercial and pragmatic and understands all the issues in detail." He has authored a number of articles and contributions for leading journals and other publications, most notably the Journal of International Banking and Financial Law, the International Guide to Money Laundering Law and Practice, and A Practitioner's Guide to the Law and Regulation of Financial Crime.


Charles is a partner in the Baker McKenzie Dispute Resolution team based in London. Charles has substantial experience of managing a broad range of high-value, multijurisdictional commercial disputes and investigations, particularly those involving fraud and white-collar crime, contentious trusts and complex banking and finance disputes. He leads the Business Crime Unit, and he is particularly well known for his experience of advising on criminal law issues, and the interaction between criminal and civil law processes. Chambers cite clients in describing Charles as "extremely knowledgeable, user-friendly and always willing to go the extra mile," while Legal 500 similarly remark that he is "a great strategic thinker and a thorough pleasure to work with." Charles is also listed as a Rising Star in Litigation by Legal Week and is also listed in Global Investigations Review as a leading expert in conducting investigations.

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