Failing to prevent fraud – large organisations should take action as new law comes into force

Colmore Business District based law firm Clarke Willmott LLP has welcomed updated guidance on corporate fraud laws coming into force next week – but cautions “the proof of the pudding is in the eating.” 

Tim Williamson, a regulatory partner at Clarke Willmott, stresses businesses must review and strengthen their internal controls to ensure they are robust and fit for purpose. 

The new guidance, prepared jointly by the Crown Prosecution Service and Serious Fraud Office, comes into force on Monday, 1st September. 

It covers the approach to prosecution under the Economic Crime and Corporate Transparency Act 2023, confirming that senior managers may face corporate fraud liability, regardless of board membership. It also reinforces the need for robust internal controls and regular reviews to prevent corporate wrongdoing. 

“It’s always helpful to have more clarity about the approach that a regulatory body intends to take. However, guidance does not necessarily pinpoint the level of risk – the proof of the pudding is always in the eating,” said Tim Williamson. 

“Businesses must ensure fraud prevention controls and internal policies are actively maintained and effective. The publication of this guidance is a timely reminder that regulatory change is fast approaching.” 

Tim, who specialises in regulation across a variety of sectors including sport, retail and SMEs, warns fast-growing companies to stay alert to corporate fraud risks. 

“Growing companies that have been on an upward trajectory also need to bear this in mind, if not immediately, then for the future. 

“Rapid growth could see them cross the relevant thresholds more quickly than they anticipate, potentially exposing them to greater regulatory scrutiny and the risk of corporate liability. 

“It remains vital for all businesses to regularly review, update, and test their internal controls and policies to ensure they are robust, effective, and fit for purpose.” 

Tim Williamson believes the legislation will also act as a quiet catalyst for change at board level. 

“In our experience many large organisations have anti-corruption controls in place already, with good governance at the top of the corporate agenda. However, it is still important for fraud controls to be evaluated and updated as necessary – important regulatory change will be here very soon.” 

Tim, alongside the regulatory team at Clarke Willmott, has compiled a guide to help businesses get ready for the new regulations.

Clarke Willmott LLP is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton, and Taunton.