In just a few months, the UK’s corporate criminal liability offence of Failure to Prevent Fraud (FTPF) comes into force. Modelled on the framework of the Failure to Prevent Bribery offence, FTPF imposes strict liability on “large organisations” for specified fraud offences committed by an "associated person" which includes; employees, subsidiaries, or agents acting on their behalf.
The offence closely mirrors the principles of the US False Claims Act (FCA), particularly in its application to fraud in government contracting and the protection of public funds. However, the UK regime goes further as liability arises irrespective of senior management’s knowledge or involvement. The sole defence is for the organisation to demonstrate that it had “reasonable procedures” in place to prevent the fraud. By contrast, the FCA requires a company to knowingly submit or cause the submission of false claims to the US government.
A defining feature of the FCA is the Qui tam provision, which empowers whistleblowers to bring claims on behalf of the government and share in any financial recovery. Although the UK currently lacks an equivalent mechanism, the Director of the Serious Fraud Office (SFO) has publicly called for the introduction of financial incentives for whistleblowers, which would align the UK regime more closely with the FCA.
The SFO has made clear that enforcement of FTPF will be a strategic priority. As the Director recently warned:
“Come September, if [companies] haven’t...
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