Under new UK legislation, coming into force later this year, organisations will be liable for fraud conducted by their employees or agents. This can be employees or agents at any level of seniority. Fines are potentially unlimited - a similar law already applies to failure to prevent bribery, and a recent corporate fine was over £400m. At the same time, the Serious Fraud Office has signalled an intent to become more proactive under new leadership. There has already been evidence of this in other industries, with a recent increase in dawn raids on both business premises and the homes of Directors.
There is a “due diligence” defence against this new Failure to Prevent Fraud offence, and companies are advised to act now to ensure they have best practice mitigation in place. Good mitigation is the type of practical steps that are emphasised on FAN and all food fraud mitigation guides, including
- Review compliance policies and procedures to address gaps in relation to fraud offences
- Ensure portfolio companies have sufficient oversight/controls over their agents and other third-party intermediaries
- Provide training on fraud risks to staff so they are alert to “red flags”
- Encourage staff to speak up if they have concerns, and provide clear guidance on how they can report issues
(from Latham & Watkins legal blog)
Photo by Wesley Tingey on Unsplash
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