The UK’s “Failure to Prevent Fraud” Law: Implications for Swiss Compliance Professionals
The UK government has introduced a new corporate criminal offence, the “failure to prevent fraud”, which will come into effect on 1 September 2025. This offence, part of the Economic Crime and Corporate Transparency Act (ECCT), aims to hold organisations accountable if they benefit from fraudulent activities conducted by employees, agents, or subsidiaries.
Under this law, organisations can face prosecution if an associated person commits fraud with the intent to benefit the organisation. To defend against prosecution, organisations must demonstrate that they had “reasonable fraud prevention measures” in place.
The UK guidance outlines six principles for establishing such measures:
- Risk Assessment – Regular evaluation of potential fraud risks.
- Proportional Procedures – Measures that align with identified risks.
- Top-Level Commitment – Leadership’s dedication to anti-fraud practices.
- Due Diligence – Vetting associated persons to prevent fraud.
- Communication (Including Training) – Ensuring awareness and compliance.
- Monitoring and Review – Continuous refinement of anti-fraud processes.
These principles aim to foster a proactive anti-fraud culture, drawing parallels to the UK’s failure to prevent bribery legislation introduced in 2010.
Implications for Swiss Compliance Professionals:
Although this legislation is specific to the UK, its relevance extends to Swiss organisations with UK operations or subsidiaries. Fraudulent acts benefiting these operations could expose Swiss companies to liability under the new law. Therefore, Swiss compliance officers should review and strengthen their fraud prevention frameworks to ensure alignment with these standards.
Switzerland already has a robust anti-fraud framework under the Swiss Criminal Code, which holds organisations accountable for offences stemming from inadequate internal controls. By adopting the UK guidance’s principles, Swiss companies can mitigate legal risks while reinforcing their commitment to ethical business practices across jurisdictions.
References:
– UK Government (2024), “New Failure to Prevent Fraud Guidance Published”, (https://www.gov.uk/government/news/new-failure-to-prevent-fraud-guidance-published)