By Adam Turteltaub

On November 6, 2024, the U.K.'s Home Office issued Economic Crime and Corporate Transparency Act 2023: Guidance to organisations on the offence of failure to prevent fraud (the Guidance). It comes out of the  Economic Crime and Corporate Transparency Act (ECCTA), which establishes that a corporation can be held criminally liable for failing to prevent fraud committed by any “associated person” for the benefit of the company. This “associated person” can be an employee or even a third party.

There is a defense, explains James Tillen, member at Miller & Chevalier, for organizations that had reasonable prevention procedures at the time of the offence. What constitutes reasonable? There are six principles:

Top level commitment

A risk assessment

Proportionate risk-based prevention procedures

Due diligence

Communication and training

Monitoring and review

Sound familiar? It is, since it builds off the guidance for the UK Bribery Act and is very similar to the US approach.

It’s not identical, though, since, unlike the US criteria for evaluating compliance programs, this guidance is fraud-specific, with details designed to address the risks posed by the fraud triangle of motive, opportunity and rationalization.

Listen in to learn more about the guidance and the particular attention it pays to monitoring the mental well-being of employees.

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