Defending “Failure to Prevent Fraud” Cases: What ECCTA 2023 Means for Criminal Defence Teams

On 1st September 2025, the Economic Crime and Corporate Transparency Act 2023 introduced a new corporate criminal offence that fundamentally changed how UK organisations face fraud liability. Now, under the “failure to prevent fraud” provisions, large organisations can be prosecuted should an employee, agent, or subsidiary commit fraud with the intention of benefitting the company — regardless of whether senior management ever knew about it or were involved.  

For criminal defence solicitors, this creates immediate, complex work. The only defence available in many cases is proving the organisation had “reasonable prevention procedures” in place, or that it wasn’t reasonable to expect such procedures. This is where forensic accounting expertise can become essential — defending an organisation facing such charges.  

This article explains how the failure to prevent fraud offence works, what it means for corporate criminal liability under ECCTA 2023, and when to instruct forensic accounting expertise for fraud defence cases.

What is the “Failure to Prevent Fraud” Offence?

The failure to prevent fraud offence applies to “large organisations” — those meeting at least two of a three point criteria: either possessing more than 250 employees, a turnover exceeding £36 million, or assets exceeding £18 million in value. 

An organisation commits a failure to prevent fraud offence if an “associated person” commits a fraudulent offence with the intention of benefitting the organisation, either directly or indirectly. 

The offence is a strict liability. As a result, there is no requirement to prove knowledge or involvement from senior management. The associated person doesn’t even need to be prosecuted for the organisation to be found guilty. If fraud is believed to have occurred, and reasonable prevention procedures were not in place, the organisation faces unlimited fines. 

The fraud offences that trigger liability include:

• Fraud by false representation, failure to disclose, or abuse of position.
• Fraudulent trading under the Companies Act 2006.
• False accounting and false director statements.
• Cheating the public revenue.
• Obtaining services dishonestly.

This is broader than most organisations anticipated. Dishonest sales practices, hiding information from consumers or investors, and fraudulent financial market activities all fall within scope.

The Senior Managers Regime: Individual Liability Under ECCTA 2023

ECCTA 2023 also reformed corporate criminal liability through the “senior managers regime,” which came into effect on 26th December 2023. Previously, prosecuting organisations required proving a person representing the company’s “directing mind and will” committed the offence — a notoriously difficult threshold to meet.

Under the senior managers regime, an organisation can be held liable if a senior manager commits a relevant offence — including fraud, bribery, and money laundering — within the actual or apparent scope of their authority. The organisation faces this liability even if the offence wasn’t committed to benefit it.

For defence teams, this creates two distinct liability routes:

1. Corporate liability under the senior managers regime (if a senior manager committed fraud within their authority).
2. Corporate liability under failure to prevent fraud (if any associated person committed fraud intending to benefit the organisation).

Both can result in unlimited fines. Both require forensic accounting analysis to challenge the prosecution’s case.

Defending “Failure to Prevent Fraud” Charges: The Forensic Accounting Role

When an organisation faces failure to prevent fraud charges, the prosecution must prove:

• An associated person committed a specified fraud offence.
• The fraud was committed with intention to benefit the organisation (directly or indirectly).
• The organisation lacked reasonable prevention procedures.

Forensic accountants support fraud defence by analysing each element and providing expert evidence that challenges the prosecution’s case.

Analysing “Reasonable Prevention Procedures”

The only defence available is proving the organisation had reasonable prevention procedures in place, or that it wasn’t reasonable to expect such procedures. Government guidance outlines six principles that should underpin fraud prevention systems:

1. Top-level Commitment: Senior management must demonstrate visible support for fraud prevention through governance structures, resource allocation, and cultural messaging that makes clear fraud is never acceptable.
2. Risk Assessment: Organisations must conduct regular, documented assessments of where fraud risks exist within their operations, considering sector-specific vulnerabilities and the nature of their business activities.
3. Proportionate Procedures: Prevention measures must be appropriate to the organisation’s size, complexity, and risk exposure. This recognises that a multinational corporation faces different expectations than a small business.
4. Due Diligence: Proper vetting processes for employees, agents, and third parties who could commit fraud on the organisation’s behalf, with ongoing monitoring of high-risk relationships.
5. Communication and Training: Fraud prevention policies must be clearly communicated to all relevant personnel, with targeted training ensuring employees understand what constitutes fraud and how to report concerns.
6. Monitoring and Review: Active oversight of fraud prevention systems through regular audits, incident reviews, and updates to procedures as risks evolve.

But what constitutes “reasonable” depends entirely on the organisation’s circumstances — specifically its size, sector, operations, and risk exposure. 

Forensic accountants examine:

• What fraud prevention systems actually existed (not just policy documents, but implemented practices).
• Whether those systems were proportionate to the identified risks.
• Whether the systems were genuinely monitored and enforced.
• Whether employees and third parties actually understood and followed the procedures.

This isn’t about creating theoretical compliance frameworks. It’s about demonstrating, through financial records, transaction analysis, and operational evidence, that effective fraud prevention was embedded in how the business actually operated.

Challenging “Intention to Benefit”

The fraud must have been committed with intention to benefit the organisation. If the fraudster’s primary motivation was personal gain with no organisational benefit, the offence doesn’t apply.

Forensic accountants trace financial flows to establish:

• Where the proceeds of fraud actually went.
• Whether any funds flowed into the organisation.
• Whether the fraud benefited the organisation indirectly (enhanced reputation, competitive advantage, avoided costs, etc.).
• Whether the organisation was itself the victim of the fraud (which eliminates liability).

The prosecution doesn’t need to prove benefit was the sole or dominant motive — only that organisational benefit was intended. But forensic analysis can show that the fraud either generated no organisational benefit whatsoever, or that the organisation lost money as a direct result.

Expert Witness Services for Corporate Fraud Defence

Forensic accountants can provide expert witness testimony on:

• Whether alleged fraud prevention procedures met the “reasonable” threshold for organisations of that type.
• Whether corporate governance structures were adequate to prevent fraud.
• The financial impact of alleged fraudulent conduct.
• Whether financial flows demonstrate intention to benefit the organisation.
• Whether accounting systems and controls were sufficient to detect and prevent fraud.

This expert evidence is critical because judges and juries aren’t equipped to assess whether complex corporate financial controls were reasonable, or whether transaction patterns indicate intentional fraud versus error or negligence.

ECCTA’s Cryptocurrency Provisions: Defence Implications

ECCTA 2023 introduced substantial new powers for law enforcement to seize, freeze, and forfeit cryptocurrency assets through amendments to the Proceeds of Crime Act 2002. These provisions intersect with failure to prevent fraud cases in two ways.

First, cryptocurrency seizure powers can be used during fraud investigations even before charges are brought. Crypto wallet freezing orders allow enforcement officers to freeze wallets held by UK-connected cryptocurrency service providers on suspicion of recoverable property or property intended for unlawful conduct. The threshold is low — reasonable grounds for suspicion — and orders can be obtained without prior notice to the wallet holder.

Second, where fraud involves cryptocurrency, forensic accounting must address:

• The valuation of seized crypto assets (which can fluctuate wildly during proceedings).
• Whether seized assets represent proceeds of fraud or legitimate holdings.
• Whether cryptocurrency transactions demonstrate fraud or were lawful business activities.
• Challenging conversions of detained cryptocurrency to fiat currency if they disadvantage the defendant.

These crypto provisions require specialist cryptocurrency forensic accounting expertise, like tracing blockchain transactions, valuing volatile assets, and analysing whether crypto flows indicate fraudulent intent or routine business operations.

When to Instruct Forensic Accounting for ECCTA Fraud Defence

Immediately, for:

• Active “Failure to Prevent Fraud” Charges: Once an organisation faces charges, forensic accounting analysis of prevention procedures and benefit flows becomes urgent. The prosecution will have completed its analysis by this stage, so the defence will need their own expertise in order to challenge it. 
• Senior Managers Regime Cases: Where senior managers face individual criminal liability alongside corporate liability, forensic accountants analyse whether the alleged conduct fell within their authority and whether it constituted fraud at all.
• Cryptocurrency Fraud Allegations Involving ECCTA Seizure Powers: When crypto assets have been seized or frozen under ECCTA’s new provisions, forensic analysis of blockchain transactions and asset valuations helps to support challenges to seizure orders and forfeiture applications.
• Pre-charge Investigations: When enforcement agencies are investigating, but haven’t yet brought charges, forensic accounting analysis can demonstrate that no fraud occurred or that prevention procedures were reasonable — potentially helping avoid prosecution entirely.

Strategic planning, for:

Contentious cases where “reasonable procedures” will be challenged: Where the prosecution argues prevention procedures were inadequate, forensic accountants can present alternative expert evidence showing procedures were proportionate and effective for that organisation’s risk profile.

Cases involving complex financial fraud allegations: Multi-jurisdictional fraud, complex corporate structures, or sophisticated financial instruments require forensic expertise to explain whether transactions were legitimate or fraudulent.

Expert witness preparation for trial: Forensic accountants prepare detailed reports analysing prevention procedures, benefit flows, and financial evidence. This will provide the foundation for effective cross-examination of experts and a clear presentation of the evidence behind the defence. 

The Practical Reality for Defence Teams

The failure to prevent fraud offence creates a significant burden for organisations: prove you had reasonable prevention in place, or face unlimited fines. For criminal defence solicitors, this means obtaining forensic accounting expertise early — before the prosecution’s case is fully developed and while evidence is still available.

Forensic accountants don’t provide compliance advice or help organisations implement fraud prevention systems. Their role will be to defend organisations already facing charges by analysing financial evidence, challenging prosecution claims, and providing expert testimony that demonstrates reasonable prevention procedures existed or that the fraud generated no organisational benefit.

ECCTA 2023 fundamentally changed corporate criminal liability. Organisations that previously faced minimal fraud prosecution risk now face strict liability for employee conduct they may not have known about. The “reasonable procedures” defence requires forensic accounting evidence — not theoretical compliance documents, but detailed analysis showing effective fraud prevention was embedded in actual operations.

For criminal defence teams handling failure to prevent fraud cases, forensic accounting expertise isn’t optional. It’s the only way to mount an effective defence against charges where the prosecution doesn’t need to prove knowledge, involvement, or even that the fraud succeeded.

Expert Forensic Accounting for ECCTA Fraud Defence

Inquesta Forensic provides forensic accounting expertise for criminal defence solicitors handling failure to prevent fraud cases and ECCTA-related corporate criminal liability matters.

Our fraud defence services include:

• Analysis of whether fraud prevention procedures met the “reasonable” threshold for organisations of that type and size.
• Expert evidence on corporate governance structures and financial controls.
• Tracing financial flows to challenge “intention to benefit” claims.
• Cryptocurrency forensic accounting for fraud cases involving crypto asset seizure under ECCTA provisions.
• Expert witness testimony on fraud investigation methodology and corporate financial analysis.

We work with criminal defence solicitors across the UK on cases where ECCTA’s new corporate criminal liability provisions create complex forensic accounting questions that require expert analysis and court testimony.

If you’re defending a client facing failure to prevent fraud charges under ECCTA 2023, or handling cases involving the senior managers regime or cryptocurrency seizure provisions, contact Rob Miller directly.

Call 0161 243 0595 or email info@inquestaforensic.co.uk.

Rob handles all forensic accounting work for fraud defence cases personally. You get his analysis, his expert evidence, and his direct support on your case.

About the Author

Rob Miller is the founder of Inquesta Forensic and specialises in forensic accounting for criminal fraud defence cases. He provides expert witness evidence on corporate fraud investigations, financial analysis, and fraud prevention systems for criminal defence solicitors handling failure to prevent fraud prosecutions and corporate criminal liability matters under ECCTA 2023.