New Fraud Prevention Regulations - Understanding the Economic Crime and Corporate Transparency Bill
According to the Crown Prosecution Service (CPS), 41% of all recorded criminal activity in the UK is fraud. This unprecedented figure continues to grow as the public struggle to cope with rising living costs.
In an effort to combat this rising tide of economic crime, the UK Home Office has introduced a pivotal piece of legislation: the Economic Crime and Corporate Transparency Bill.
A significant part of this legislation, if it receives Royal Assent, will be a new offence for failing to prevent fraud.
Understanding the Economic Crime and Corporate Transparency Bill
UK Government has proposed the Economic Crime and Corporate Transparency Bill, to make it easier to hold large organisations accountable for fraud committed by their employees.
Under this legislation, an organisation is guilty of an offence if any person associated with them commits, or aids, an act of fraud or false accounting for the benefit of that organisation. Importantly, there will be no need to prove that any consent or conspiracy occurred to encourage the act.
Large organisations defined as those that meet two of the following three criteria:
More than 250 employees,
More than £36m turnover,
More than £18m in total assets.
While SMEs are exempt from this new legislation, they are still liable under existing fraud prevention legislation.
The introduction of this offence underscores the importance of fraud prevention within organisations. Businesses are now encouraged, more than ever, to put in place robust fraud prevention procedures.
If an organisation is found guilty of the offence of failing to prevent fraud, it can receive an unlimited fine.
Role of Background Checks in Fraud Prevention
One effective tool in fraud prevention is the use of background checks. These checks can reveal critical information about prospective or current employees, helping to assess their suitability for a role that involves managing financial resources or sensitive data.
There are various types of background checks, each serving a different purpose:
Adverse Credit Checks, for instance, search publicly available data to reveal information about a person's financial history
FCA Checks search the Financial Conduct Authority database for a person's employment history in controlled functions.
Sanctions Checks, search for sanctions, enforcements, and warnings in the UK and worldwide, helping to identify individuals known or suspected of illegal activities.
These background checks are often used to supplement the mandatory Basic or Standard DBS Checks needed by those in positions of significant financial trust.
While the Economic Crime and Corporate Transparency Bill is still going through the Commons, with the rising cost of fraud, it seems unlikely to be rejected.
Experts advise preparing for the changes as soon as possible to ensure you aren’t caught out. Prevention is better than cure, especially when it comes to fraud.
Don't leave your organisation vulnerable, get in touch today to see how we can help secure your organisation. Implement thorough background checking today and rebe assured your team is trustworthy and reliable.