The UK’s new corporate offence for failure to prevent fraud (FTPF) has reshaped how large organisations must approach fraud risk, governance, and operational accountability.
According to Corlytics, introduced on 1 September 2025 as part of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), it represents a fundamental shift in corporate liability. FTPF creates strict liability for organisations that do not implement “reasonable procedures” to stop fraud carried out by employees, agents, subsidiaries, or associated persons—even when senior leaders were unaware of the misconduct.
Modelled on the structure of the UK Bribery Act 2010, it extends the concept of procedural defence into the fraud landscape and establishes new expectations for prevention, oversight, and documentation.
The legislation applies specifically to large organisations meeting at least two thresholds: more than 250 employees, turnover above £36m, or assets exceeding £18m. Importantly, its reach extends beyond the UK.
Overseas companies and their subsidiaries may still face liability when fraud affects UK victims or occurs within the UK’s jurisdiction. Its extraterritorial nature means organisations with complex international structures must reassess their compliance systems across geographies, particularly where fraud risks differ. The updated Crown Prosecution Service and Serious Fraud Office Corporate Prosecution Guidance signals that enforcement will follow, making preparedness an urgent priority.
A central element of the defence is demonstrating “reasonable procedures”, guided by the government’s six principles: top-level commitment, risk assessment, proportionate controls, due diligence, training and communication, and ongoing monitoring. These principles are intentionally flexible, enabling organisations to tailor frameworks to their operational reality. However, flexibility also places responsibility on organisations to build evidence-driven, risk-sensitive systems that can withstand scrutiny.
This is where RegTech becomes indispensable. Regulatory Change Management (RCM) tools equip organisations to track evolving legal requirements in real time, implement policy updates consistently, and maintain continuous compliance across jurisdictions. For global firms navigating the cross-border consequences of FTPF, RegTech reduces complexity and ensures accountability. Automated impact assessments, linked documentation, and integrated reporting help translate regulatory obligations into standardised, repeatable processes.
Yet technology alone is not enough. Workflows operationalise compliance by defining how fraud prevention processes run day to day: who approves what, when reviews occur, which documents must be generated, and how actions are escalated. RegTech platforms increasingly incorporate workflow automation that supports role-based approval chains, integrates with HR, finance and legal systems, and captures completion of critical tasks. These structured workflows ensure that prevention procedures are not theoretical but embedded in real operations.
Audit trails then provide the evidential backbone of the entire system. In a regime where the burden of proof lies with the organisation, tamper-proof, time-stamped, and integrated audit logs are essential. They show who acted, what decisions were made, and why those decisions were taken. Modern RegTech platforms offer real-time audit visibility and automated anomaly detection, enabling organisations to respond quickly to risks while supporting the reasonable procedures defence. Transparent audit trails foster accountability and build trust with regulators, investors, and stakeholders.
The arrival of FTPF demands a shift from reactive compliance to proactive governance. Organisations must align three pillars: legal understanding of the offence, operational frameworks that translate requirements into structured actions, and technological capability to automate, scale, and evidence compliance. Workflows and audit trails sit at the core of this ecosystem. They form the critical link between policy and practice, ensuring that fraud prevention is more than an aspiration—it becomes a living, traceable system of controls.
As enforcement ramps up, organisations that embrace technology, embed compliance within daily operations, and maintain clear evidential records will be best positioned to mitigate risk. The question regulators will increasingly ask is not simply whether fraud prevention procedures exist but whether organisations can prove they are actively applied.
Copyright © 2025 RegTech Analyst
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