Fraud Law Kicks In: UKGC Warns Operators to Step Up

The Economic Crime and Transparency Act 2023 provisions came into action at the beginning of this month. The regulator warns that this requires organisations to actively prevent fraudulent activity, and some license holders may be affected.

The legislation defines a new corporate criminal offence called “failure to prevent fraud”. Under these changes, large organisations can be held accountable if an “associated person” such as an employee, agent or subsidiary commits fraud with the intent of helping the organisation.

Dishonest sales practices, dishonest practices in financial markets and concealing important information from customers or investors all fall under this umbrella.

If faced with prosecution, organisations must prove that they had reasonable anti-fraud measures when the crime was committed.

The purpose of the provisions is to encourage anti-fraud corporate cultures.

The regulator has directed licensees to guidance published by the Home Office last November. If companies are unsure whether they are complying with the new legislation, the UKGC encourages them to seek legal advice.

Speaking on the topic, Minister with responsibility for fraud, Lord David Hanson, stated that

“Fraud is a pernicious crime, and we are determined to root it out wherever it takes place. This guidance marks the first steps towards a corporate culture shift around fraud prevention”.

This cultural shift is aimed primarily at large organisations, but this changing approach to fraud prevention also sets good guidelines for smaller-scale operators.

Making up 40% of all crime in England and Wales, the way fraud is tackled in the UK needs to undergo seismic change. Director of the Serious Fraud Office, Nick Ephgrave, asserts that

“Corporate fraud significantly damages confidence in UK companies and ultimately costs the taxpayer. The publication of this guidance means that time is running short for corporations to get their house in order or face criminal investigation”.

Corporate fraud haemorrhages the pride UK citizens feel for their nation’s companies. This new legislation will improve companies’ reputations and demonstrate their intent to heal relationships with consumers.