What is the ‘failure to prevent fraud’ offence?
These terms will usually be clear. More unusual circumstances may be subject to legal argument when the offence is prosecuted in the future.
What is a fraud offence?
A fraud offence is an act which constitutes an offence listed in Schedule 13 to the ECCTA 2023, which includes an offence under section 1 (fraud), section 9 (participating in a fraudulent business) or section 11 (obtaining services dishonestly) of the Fraud Act 2006, cheating the public revenue, an offence under section 17 (false accounting) or section 19 (false statements by company directors) of the Theft Act 1968, and an offence under section 993 of the Companies Act 2006 (fraudulent trading).
What is an employee or agent?
Any employee is an individual with a contract of employment with a large organisation. An agent is an individual or entity contracted to provide services for the large organisation. These terms will usually be clear. More unusual circumstances may be subject to legal argument when the offence is prosecuted in the future.
What does “for the organisations’ benefit” mean?
The fraud or intended fraud by an employee or agent must be of benefit to the organisation. The benefit does not have to be financial. The organisation is not guilty of an offence if it was a victim or intended victim of the fraud offence (section 199(3), ECCTA 2023). The term “victim” applies if the loss caused or intended to be caused by the fraud would be borne by the relevant body, or the fraud was committed with intent to harm the relevant body. An organisation would not be a victim because it suffered indirect harm as a result of the fraud by an associated person (for instance, because revelation of the fraud damaged the relevant body’s reputation).
