ECCTA (Section 199): Failing to Prevent Fraud – Are You Defensible?
January 15, 2026
Section 199 of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced a new corporate offence that significantly raises the bar on fraud risk management.
Large organisations can now be criminally liable if an employee, agent, or other associated person commits fraud for the organisation’s benefit—and the organisation did not have reasonable fraud prevention procedures in place.
This is a strict liability offence. Prosecutors do not need to prove senior management knowledge or intent. If fraud occurs and the organisation cannot demonstrate an adequate prevention framework, liability follows.
The only defence: reasonable procedures
The sole statutory defence is that the organisation had reasonable procedures in place to prevent fraud, or that it was reasonable not to have such procedures. In practice, regulators have made clear that “reasonable” will be interpreted robustly.
Organisations should be acting now to:
- Conduct a documented fraud risk assessment covering business models, revenue streams, incentive structures, third-party exposure, and jurisdictional risk.
- Design proportionate prevention controls aligned to identified risks, including financial controls, approval thresholds, segregation of duties, and oversight of agents and intermediaries.
- Set the tone from the top, with clear board ownership, senior accountability, and demonstrable commitment to fraud prevention.
- Implement targeted training and communications so employees and associated persons understand fraud risks, red flags, and reporting routes.
- Maintain monitoring, reporting, and review mechanisms, including whistleblowing channels, audits, and periodic reassessment as the business evolves.
- Evidence everything. Policies without implementation, or controls without records, will not support a defence.
Why this matters
Section 199 fundamentally shifts fraud risk from an ethical and compliance issue to a core criminal exposure. Organisations that treat fraud prevention as a “paper exercise” will struggle to rely on the defence. Those that embed it into governance, controls, and culture will be best positioned to protect both the business and its leadership.
In short: if fraud happens, can you prove you did all that was reasonable to prevent it? If not, now is the time to act.
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Thank you to everyone who attended one of our fraud prevention webinars in 2025. For those who missed them, you can now watch all the recordings at your convenience on the SAFE YouTube channel. Whether you want to find out more about the drivers of fraud, or explore strategies for preventing emerging threats such as dual employment and imposter fraud, we've got a webinar for you. All the links you need are below, and we've included links to additional resources available elsewhere on the SAFE website.
SAFE – Security and Fraud Experts and Dorset HealthCare University NHS Foundation Trust are proud to be part of Project WISE (Workforce Integrity and System Efficiency), a proactive initiative using data and advanced analytics to strengthen fraud detection across the NHS. The NHSCFA estimates that £1.346 billion of NHS funding is vulnerable to loss through fraud, bribery and corruption in England. With fraud posing a significant risk to NHS resources each year, we’ve joined forces with the NHS Counter Fraud Authority and four other NHS organisations across the South East and South West to pilot this first-of-its-kind initiative. The pilot is helping to identify emerging fraud risks and patterns, turning complex data into actionable intelligence that supports local and regional counter fraud teams.
SAFE – Security and Fraud Experts is proud to announce its active participation in International Fraud Awareness Week (IFAW), taking place from 16–22 November 2025. This global initiative unites organisations and communities around the world to raise awareness, promote education, and take collective action against fraud. As a trusted leader in security and fraud prevention, SAFE is committed to empowering businesses and individuals with the knowledge and tools needed to identify, prevent, and respond to fraudulent activity.
