The entry into force of the Economic Crime and Corporate Transparency Act 2023 (“ECCTA 2023” or “Act”) marks a new chapter in British legislation aimed at combating financial crime and promoting corporate integrity. With robust measures and potential extraterritorial application, the new law seeks to strengthen the accountability mechanisms of corporate entities, enhance transparency in corporate structures, and prevent the misuse of companies for illicit purposes. ECCTA 2023 complements and deepens previous reforms, such as the Economic Crime (Transparency and Enforcement) Act 2022 and introduces new obligations for companies operating directly or indirectly in the UK.
One of the key highlights of the ECCTA 2023 is the creation of the new corporate offence of Failure to Prevent Fraud Offence (“FTP Fraud Offence“), applicable to medium and large companies; and the expansion of the Identification Doctrine, enabling the criminal liability of companies for acts committed by senior managers, even if they do not hold formal executive titles. Coming into force on September 1, 2025 is the newly introduced Failure to Prevent Fraud Offence (“FTP Fraud Offence“), set out in Section 199. The new normative provision establishes that a legal entity may be held criminally liable if an employee, agent, subsidiary, or other associated person commits fraud intended to benefit the organization — unless the organization can demonstrate that it had reasonable fraud prevention procedures. The offence applies to entities classified as Large Organizations, defined as those meeting at least two of the following criteria, which are not out of the ordinary: (i) more than 250 employees, (ii) annual turnover of exceeding £36 million, or (iii) total assets exceeding £18 million.
In addition, Section 196 of ECCTA 2023 expands the scope of the Identification Doctrine, allowing certain financial offences to be directly attributed to a company when committed by a senior manager – who plays a relevant role in decision-making or in managing a substantial part of the company’s activities. Crucially, this applies even if the individual does not hold a formal executive title, as long as they act within the actual or apparent scope of their authority.
The Act also strengthens the powers of UK law enforcement agencies, such as the National Crime Agency and the Serious Fraud Office, by enhancing their ability to obtain information, freeze suspicious assets, and conduct investigations into financial crimes. In this context, ECCTA 2023 represents a landmark reform of the UK’s legal framework for combating financial crime and enhancing corporate accountability. With its wide-ranging provisions and notable extraterritorial effects, the legislation reshapes the risk landscape faced by companies with connections to the UK.
Companies should assess their risk of exposure and take risk-based proportionate prevention measures. For more information, please contact us.