The UK Home Office has introduced a new crackdown on fraud to protect businesses and consumers as part of the Government’s commitment to tackling financial crime.
As part of a failure to prevent fraud offence, organisations must demonstrate their deterrence measures should fraud be committed by an employee. Failure to do so risks an unlimited fine.
The legislation will make it easier to prosecute a large organisation if an employee commits fraud for the organisation’s benefit.
This is part of new measures announced by the Home Office, with the support of the Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS), in a new fraud crackdown in line with the Government’s ongoing commitment to tackling economic crime.
The new measures demand that organisations demonstrate sufficient measures to protect businesses and consumers and prevent fraudulent activity, or else risk unlimited fines.
An overall goal is to promote financial crime prevention, encouraging businesses to invest in this area and ensure their own processes are effective in order to minimise incidences and protect consumers, businesses and the taxpayer.
The new legislation seeks to protect the public from a wide range of vexes, including dishonest sales practices, false accounting and hiding important information from consumers or investors.
Dr Henry Balani, head of industry and regulatory affairs for Encompass Corporation, commented: “Tackling financial crime should be at the forefront of the Government’s plans, and regulatory developments.
“Those such as the Economic Crime and Corporate Transparency Bill and Economic Crime Plan Two are key to protecting the UK’s standing as a safe and lucrative place to conduct business, as well as protecting the public from the widespread effects of economic crime.
“Support from the regulator, as outlined in the FCA’s roadmap for the next 12 months, is a crucial aspect to promoting sound practices, boosting both the prevention and detection of illicit activities,” continues Balani.
‘Technology has a central role to play in this ongoing fight against financial crime’
“Leveraging the latest in technology, such as dynamic Know Your Customer (KYC) process automation, for example, can dramatically increase the effectiveness and efficiency of KYC processes and overall compliance, while helping to identify risk faster.
“Harnessing technology solutions, alongside Government and regulatory focus, can empower businesses to play their part in the response to financial crime, and, in doing so, help to ensure the UK maintains its reputation as a leading hub to do business with,” he concludes.
The Home Office’s legislation is to be introduced within the Economic Crime and Corporate Transparency Bill. The legislation will allow prosecutors to hold organisations accountable should an employee commit fraud for the organisation’s benefit and reasonable prevention procedures be insufficient.
Security Minister Tom Tugendhat said: “Our new failure to prevent fraud offence will protect consumers from dishonest and misleading sales practices, and level the playing field for the majority of businesses that behave responsibly.
“This Government is committed to fighting economic crime, as demonstrated by our recently launched Economic Crime Plan Two, which set out how we will give law enforcement more state-of-the-art resources to tackle high-level offending.”