New Anti-Fraud Legislation: What You Need to Know

A new law, the Economic Crime and Corporate Transparency Act 2023, came into effect on September 1, 2025. This law aims to prevent large companies from benefiting financially from fraudulent activities carried out by their staff or representatives. The legislation introduces a new offense called “failure to prevent fraud,” which targets companies that fail to prevent fraudulent activities within their organization.

What the Law Means for Companies

The new law applies to large corporations, but smaller businesses can also benefit from implementing best practices to manage and minimize their fraud risks. The law enables prosecution of a company if fraud is committed by any individual associated with it to gain an advantage for the business or its clients. Examples of such fraud include deceitful sales tactics, falsification of documents, and market manipulation. Companies can face liability even if their executives were unaware of these illicit actions.

Impact on the Gambling Industry

The UK Gambling Commission has alerted licensed gambling operators to review and strengthen their fraud prevention measures in response to this new legislation. The Commission expects license holders to maintain strong systems to prevent gambling from being exploited for criminal purposes. Operators who fail to comply with the new law may face serious consequences, including increased scrutiny, criminal investigations, and substantial fines.

Guidance for Businesses

The Home Office has issued guidance on practical steps businesses can take to protect themselves from fraud. These steps include:

• Establishing clear anti-fraud policies
• Conducting regular risk assessments
• Maintaining effective internal controls

Companies that demonstrate they had reasonable safeguards in place at the time of an incident may be able to mount a robust legal defense. However, neglecting these responsibilities can result in serious consequences, including substantial fines and damage to their reputation.

Risk Management and Enforcement

The Serious Fraud Office has indicated that organizations failing to take appropriate action may face increased scrutiny and criminal investigations. Penalties will be determined by factors such as company size, financial resources, and the public impact of the offense. Businesses are advised to reassess their fraud risks and strengthen their protective measures accordingly.

Conclusion

The new anti-fraud legislation is a significant update to corporate liability laws, aiming to prevent companies from benefiting financially from fraudulent activities. The law applies to large corporations, but smaller businesses can also benefit from implementing best practices to manage and minimize their fraud risks. By establishing clear anti-fraud policies, conducting regular risk assessments, and maintaining effective internal controls, businesses can protect themselves from fraud and avoid serious consequences. It is essential for companies to take proactive steps to comply with the new law and maintain a strong reputation in the industry.