Business Insight

Board Priorities 2024: Failure to prevent fraud

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    The Economic Crime and Corporate Transparency Act 2023 was granted Royal Assent on 26 October 2023. It is likely to become law in the first half of 2024. It includes a new ‘failure to prevent fraud’ corporate criminal offence which means that companies in scope of the law can be held liable for fraud committed by individuals or entities on their behalf. The defence is that the company had in place at the time of the fraud, reasonable procedures to prevent it. Although the offence will be limited to "large" organisations initially, the scope of this legislation can be amended with secondary legislation in future.

    Companies in all sectors will therefore need to demonstrate that they have reasonable procedures to prevent and detect fraud and a top level commitment to driving an anti-fraud culture. The reasonable procedures defence is likely to be modelled on the Bribery Act and similar principles for the failure to prevent the facilitation of tax evasion offence. These six principles include proportionate procedures, top-level commitment, risk assessment, due diligence, communication (including training) and monitoring and review.

    Boards need to consider how these six principles are embedded into their businesses and that they can demonstrate a clear top level commitment to preventing and detecting fraud. 


    Read about the other Board Priorities for 2024

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    Ms Ruby Hamid Thumbnail

    Ruby Hamid, Partner, Dispute Resolution, London

    T: +44 782 334 1079

    Ruby Hamid is a partner in Ashurst's dispute resolution practice. She specialises in global investigations, white collar crime, compliance and risk management. Her technical expertise in bribery and corruption, money laundering, serious fraud and tax evasion supports her practice. She is a highly experienced trial lawyer, having acted as sole advocate in courts of first instance, appellate courts and before a variety of tribunals.

    A key part of Ruby's practice is compliance and risk management, and she recently spent 6 months seconded to a Fortune 500 company as Head of International Compliance. She advises on financial crime prevention, compliance and corporate governance programmes, responses to new legislation, modern slavery and supply-chain control.

    Ms Rachel Sexton Thumbnail

    Rachel Sexton, Head of Ashurst Risk Advsiory UK, London

    T: +44 791 7012 140

    Rachel is the Head of the UK Ashurst Risk Advisory practice. She has led a number of large, complex fraud, money laundering, bribery and corruption, cross-border tax, mis-selling, economic sanctions and other financial crime investigations and regulatory enforcements. Evidence gathered during these investigations has been presented to the US Department of Justice, US Securities & Exchange Commission (SEC), US Office for Foreign Asset Control (OFAC), US Internal Revenue Service (IRS), New York State Department of Financial Services, UK FCA, Swiss Finra and the UK Serious Fraud Office. Rachel has also worked with financial institutions to remediate the issues identified during investigations and strengthen compliance programmes and build effective controls frameworks and Target Operating Models to address governance and control weaknesses.

    She is a Board Trustee of the Fraud Advisory Panel and JUSTICE.

    This publication is a joint publication from Ashurst LLP and Ashurst Risk Advisory LLP, which are all part of the Ashurst Group.

    Ashurst Risk Advisory LLP services do not constitute legal services or legal advice, and are not provided by qualified legal practitioners acting in that capacity. The laws and regulations which govern the provision of legal services in the relevant jurisdiction do not apply to the provision of risk advisory (non-legal) services.

    This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.


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