What is the failure to prevent fraud defence?
It is a defence for the organisation to prove that it had reasonable fraud-prevention procedures in place, or that it was not reasonable in all the circumstances to expect it to have any procedures. The burden is on the organisation, on the balance of probabilities.
Not sure this applies to you? The offence targets large organisations that meet the size test — check whether you are in scope.
In short
- Defence: reasonable procedures were in place, or none were reasonable to expect
- Burden on the organisation, on the balance of probabilities
- Evidence-led — no certificate or pre-approval exists
The defence is evidence-led: it depends on what you can show about the procedures that existed and operated. There is no certificate or pre-approval; the assessment is made on the facts, ultimately by the courts.
This is why a defence file matters. DefenceFile organises and preserves the operating record — risk assessment, procedures, due diligence, attestations, training, monitoring, and board oversight — so advisers and counsel can evaluate the position. It does not prove the defence or guarantee that a statutory defence will succeed.
The sample board pack — a one-page view of where evidence is complete and what is missing — opens in your browser, no email, no form.
Official sources
- Economic Crime and Corporate Transparency Act 2023
Royal Assent 2023-10-26; accessed 2026-06-15.
- Home Office failure-to-prevent-fraud guidance v1.5
Updated 2025-10-10; accessed 2026-06-15.
Keep reading
DefenceFile organises evidence for legal and compliance review. It does not provide legal advice, create privilege, certify scope, certify reasonable procedures, or guarantee that a statutory defence will succeed.