UK fraud law raises the stakes for digital finance firms

By Puja Sharma

Large companies in the UK are now exposed to prosecution and unlimited fines under a new corporate offence that makes them liable if fraud is committed by employees or associates for the organisation’s benefit.

The “failure to prevent fraud” offence, which came into force on Monday, is part of the Economic Crime and Corporate Transparency Act. It represents a fundamental shift in corporate accountability by removing the need to prove that senior management were aware of or complicit in fraudulent activity. The law applies to companies that meet at least two of three criteria: employing more than 250 people, generating over £36 million in turnover, or holding more than £18 million in assets.

The UK’s new “failure to prevent fraud” offence, which came into force this week, signals one of the most significant shifts in corporate accountability in recent years. Large organisations – including fast-growing FinTechs – can now be prosecuted if an employee, subsidiary, agent or any associated party commits fraud with the intention of benefiting the firm, even without direct involvement from senior leadership.

The offence falls under the Economic Crime and Corporate Transparency Act and carries unlimited fines for companies that fail to demonstrate “reasonable fraud prevention procedures”. It applies to organisations that meet at least two of three thresholds: more than 250 employees, £36 million in turnover, or £18 million in total assets.

Fraud is the UK’s most common crime, with recent data from the Office for National Statistics showing a 31% year-on-year increase. The new measure aims to drive a culture of prevention, similar to the “failure to prevent bribery” offence introduced in 2010. For FinTech firms – many of which are scaling rapidly and managing high transaction volumes – this law adds a new layer of regulatory scrutiny.

Examples of corporate fraud risks include misleading sales practices, withholding material information from investors or consumers, or misconduct in financial markets. For FinTechs, this could extend to areas such as digital lending, crypto trading, or payment platforms, where consumer trust and regulatory oversight are already under close watch.

Industry specialists argue that the law raises the stakes for compliance, governance and risk management. Organisations will need to review fraud risk assessments, strengthen internal controls, and ensure staff and third parties are trained and aware of whistleblowing procedures. The shift also pushes firms to embrace technology-driven fraud prevention tools – from AI-powered transaction monitoring to real-time identity checks.

Cindy van Niekerk, CEO of digital identity platform Umazi, sought the regulation as a catalyst for innovation as much as a compliance hurdle. “This new law is an opportunity as much as a challenge. By embedding digital identity verification and audit trails into their operations, businesses can not only comply with regulations but also build stronger trust with customers, partners, and investors. The companies that adapt quickly will set a new standard for transparency and resilience in the UK economy.”

For the UK’s FinTech sector, where growth and risk often go hand-in-hand, the message is clear: fraud prevention is no longer optional, it’s a legal obligation.