The FTPF Offence Explained
An organisation commits the offence if a specified fraud offence is committed by an employee or agent for the organisation's benefit and the organisation did not have reasonable fraud prevention procedures in place. The offence is one of strict liability - the organisation does not need to have known about or authorised the fraud.
Specified offences include: fraud by false representation (Fraud Act 2006 s2); fraud by abuse of position (s4); fraud by failing to disclose (s3); false accounting (Theft Act 1968 s17); and fraudulent trading (Companies Act 2006 s993).
Who Is in Scope?
The offence applies to 'large organisations' meeting at least two of three thresholds: 250 or more employees; annual turnover of £36 million or more; or total assets of £18 million or more. These thresholds align with the Companies Act 2006 definition of a large company.
The offence applies to bodies corporate, partnerships, and unincorporated associations operating in the UK. Parent companies may be liable for fraud committed by subsidiaries where the fraud was for the parent's benefit.
The Reasonable Procedures Defence
An organisation has a defence if it proves it had reasonable fraud prevention procedures in place, or that it was not reasonable in all the circumstances to expect procedures to be in place. The Ministry of Justice has published guidance on what constitutes reasonable procedures.
Reasonable procedures typically include: a fraud prevention policy; risk assessment; proportionate internal controls; due diligence on employees in sensitive roles; whistleblowing mechanisms; and regular monitoring and review. The procedures must be effective in practice, not merely documented.
Expert Advisory Role
Forensic accountants and employee fraud experts assist organisations in assessing the adequacy of existing fraud prevention procedures, identifying gaps, and designing improvements before an offence occurs. This proactive advisory role is increasingly important for compliance teams and audit committees.
In FTPF proceedings, expert witnesses may be instructed to opine on whether the organisation's procedures were reasonable at the time the fraud occurred - a retrospective assessment requiring analysis of the controls environment, policy documentation, and actual practice.
How to Prepare
Organisations should conduct a fraud prevention gap analysis against MOJ guidance before September 2025 and implement improvements. Key actions include: appointing a senior responsible officer for fraud prevention; conducting a fraud risk assessment; reviewing and updating internal controls; training employees; and establishing monitoring mechanisms.
Document all procedures and their implementation - the defence requires evidence that procedures were not merely written but actively maintained and enforced.