The Serious Fraud Office (SFO) has released updated guidance encouraging companies to promptly self-report suspected fraud or misconduct. This new initiative aims to help businesses avoid criminal prosecution and mitigate penalties by enhancing transparency and reducing the need for extensive investigations.
What Companies Must Include in a Self-Report
If a company suspects fraud or misconduct, self-reporting to the SFO can be a critical step. To ensure that the SFO can process the report efficiently, it must contain the following:
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A description of the suspected offence.
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Key findings from any internal investigation, if applicable.
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Actions taken or planned to remediate the situation.
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A commitment to full co-operation with the authorities.
The SFO has committed to responding within 48 hours of a company self-reporting. Any Deferred Prosecution Agreement (DPA) negotiations will aim to conclude within six months, providing a clear pathway for companies to resolve the issue.
Guidance on the Failure to Prevent Fraud Offence (ECCTA 2023)
As part of the UK’s Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023), Section 199 introduces a corporate criminal offence for failure to prevent fraud. This section holds companies accountable if they fail to have reasonable procedures in place to prevent fraudulent activities within their operations.
To help businesses navigate the complexities of this new regulation, UK Finance has developed supplementary financial services guidance. This guidance is intended for members of the financial services sector and provides insight into reasonable prevention procedures and circumstances where it might not be reasonable for a company to have them in place.
While this guidance is not statutory, it offers valuable advice for companies to better understand and interpret the failure to prevent fraud offence. It is designed to support legal advisors and business leaders in assessing their current procedures and making any necessary adjustments to ensure compliance with the ECCTA 2023.
Decision Tree for Assessing the Failure to Prevent Fraud Offence
A key component of the Home Office guidance on the failure to prevent fraud offence is Appendix A, which contains a decision tree. This decision tree helps businesses assess whether the offence applies in a given incident. It’s a useful tool for determining whether a company’s actions or inactions could lead to a criminal offence under the ECCTA 2023.
This decision tree will likely be referenced in every incident where the failure to prevent fraud offence is considered, guiding companies through a structured assessment process.
Download the UK Finance Guidance
To further assist companies, UK Finance has made their Failure to Prevent Fraud industry guidance available. It provides comprehensive advice for financial services firms on how to interpret the ECCTA 2023 and develop effective prevention procedures. You can download the guidance PDF from the following link:
Download the UK Finance Failure to Prevent Fraud Industry Guidance
In conclusion, businesses must be proactive in implementing robust prevention measures to mitigate the risk of fraud. By following the new guidance and utilizing the decision tree, companies can better position themselves to avoid penalties and criminal prosecution related to the failure to prevent fraud offence.
