Fraud prevention: review the process in operation

The current position

The failure-to-prevent-fraud offence has been in force since 1 September 2025. Its application depends on organisation and group scope, associated persons, the relevant fraud and intended benefit. The Home Office guidance includes ongoing monitoring and review among its six prevention principles. A policy adopted before commencement is therefore a starting point for an operating process.

This briefing does not describe a new legal development on 1 November 2026. It sets out a practical review method for an existing regime. Whether procedures amount to a statutory defence depends on the facts and is ultimately a matter for the courts.

Five questions for a useful review

Our editorial approach is to select the scenarios with the greatest potential significance and examine what happened in practice. Combine documentary evidence with appropriately conducted staff discussions. Keep the review focused on prevention by people acting for the organisation, while recognising that other fraud controls may overlap.

• Have targets or incentives changed in a way that could encourage misleading statements?
• Does due diligence cover the relevant services performed by agents and other associated persons?
• Can staff show how they challenged a questionable claim, transaction or instruction?
• Did escalation reach someone with authority and sufficient independence to act?
• Have weaknesses resulted in a named action, a deadline and evidence of retesting?

Record findings without overstating them

Distinguish effective operation in the cases reviewed, identified exceptions and areas where evidence was unavailable. Record sampling and scope limits so a later reader understands what the work supports. If a control failed, consider the underlying incentive, process design and supervision as well as the individual event.

Present senior management with the decisions required: resources, changed responsibilities, further investigation or acceptance of clearly defined residual exposure where lawful. A completed training log or signed annual statement should not be presented as proof that fraud cannot occur.