Fraud in focus: UK government's latest efforts

Prior to its election victory in July 2024, Labour sought to focus on tackling the issue of fraud, with the party’s manifesto promising to introduce “a new expanded fraud strategy to tackle the full range of threats, including online, public sector and serious fraud”. 

The Labour Government has proposed various measures to tackle fraud both before and after the election, including, investigating public money lost to fraud during the Covid-19 pandemic, appointing a Covid-19 counter-fraud commissioner, and considering introducing tougher sentences for “frauds against the public purse”. 

The Government’s proposed measures must also be considered in the context of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) set to come into force on 1 September 2025. The ECCTA aims to hold large organisations (in both the public and private sectors) accountable if they benefit from fraudulent activities conducted by their employees, agents, subsidiaries, or other associated persons. 

For a detailed summary of the recent guidance on the new corporate criminal offence of 'failure to prevent fraud' under ECCTA, please refer to our article: New UK government guidance on failure to prevent fraud offence. 

How could this affect you?

When the Government implements a new fraud strategy, organisations will need to be alert to the potential impact that changes to the regulatory landscape may have on their businesses, and the need to make changes to their practices. 

These impacts could include the need for regulatory compliance, operational changes, financial costs, and reputational risks.

Additionally, businesses may need to invest in employee training and meet new reporting requirements to ensure they effectively prevent and address fraud. By staying informed and proactive, organisations can better navigate these changes and mitigate associated risks.

Practical steps to prevent fraud

As a starting point, we have set out below some initial practical steps to help your organisation mitigate the risk of fraud:

• Employee training and awareness – ensure that employees are kept up to date on the organisations’ policies and procedures for fraud. This can be achieved by providing regular training to employees on fraud detection and prevention techniques.
• Due diligence - ensure thorough due diligence is carried out before entering into contracts with third parties.
• Use of technology - effective technology that uses AI and machine learning including digital watermarking, risk scoring and anomaly detection technology can be used to detect fraud within your business. 
• Audits – regular audits are a useful tool to help spot any unusual or potentially fraudulent activity.
• Updating policies and procedures – make sure you have an action plan for when you consider fraudulent activity may have occurred, so you can act quickly and effectively to protect your business, employees, funds, and your reputation. 

As tackling fraud becomes a priority in both the private and public sectors, Mills & Reeve has launched a new fraud forum, Deception Diaries. This forum will keep you informed about the evolving landscape and offer expert advice on trending fraud topics.