What the impending 'failure to prevent fraud' bill means for UK companies

Be that as it may, HM Revenue & Customs has recently revealed that it has nine live investigations under way that await charging decisions. It also has a further 26 potential investigations to consider. Once again, there is no doubt that the existence of the offence incentivises ethical behaviour. This is to be welcomed.

The acknowledged difficulty of holding corporates responsible for wrongs committed in their name caused the government to set the Law Commission to a review of the law. The commission published its options paper in June 2022, with the proposal of failure to prevent fraud offences.

Forthcoming changes

This year could very well see the addition of further failure to prevent offences. The economic crime and corporate transparency bill recently completed its passage through the House of Commons and is currently at committee stage in the House of Lords. This will be a pivotal point in the bill’s evolution.

At its third reading in the commons, amendments were introduced that would include the creation of an offence of failure to prevent fraud, false accounting and money laundering. This was withdrawn without being put to the vote on the strength of the government’s undertaking to revisit this before the Lords.

According to the National Crime Agency, if any of us falls victim to crime, the chances are that crime will be fraud.

The bill’s second reading in the House of Lords shows that there is a large appetite for the introduction of further such offences into the law. Former solicitor-general Lord Edward Garnier called for the expansion of the regime to cover “at least some” of those offences for which a deferred prosecution agreement would be available.

This list, which includes fraud and money laundering, gives lawmakers something to choose from. Interestingly, the Law Commission had argued against using this list, saying that it would be too broad and would risk duplicating the existing offences.

We will see what approach the government adopts in the coming days once the committee considering the bill starts its work.

While we do not know what offences will be targeted by the upcoming additions to the bill, it is highly likely that fraud will be included in this list.

Fraud has become a significant national concern, and is now considered to be a national security issue.

According to the National Crime Agency, if any of us falls victim to crime, the chances are that crime will be fraud.

There may be a collective sigh of dismay at the thought of having to create yet more policies, more controls, and more procedures.