‘Failure to prevent fraud’ – Guidance for UK sports organisations on steps to take before Sept 2025

The UK’s Economic Crime and Corporate Transparency Act (ECCTA) 2023 contains a new ‘failure to prevent fraud’ offence, which comes into effect on 1 September 2025.  The new offence is part of wider reform of corporate criminal enforcement in the UK^[1] being ushered in under ECCTA (also including the senior manager regime^[2]) which ultimately aims to make it easier to prosecute commercial organisations for fraud, bribery money laundering.  Such offences can already draw significant repercussions for sports organisations - like the £615 million penalty^[3] imposed on sports gaming company, Entain. For a broader overview on how ECCTA will impact sports organisations, please see this LawInSport article^[4] .  Below, we update the position in a further article written by Jeremy Summers (with contributions from Chris Wrigley and Jack Pryterch) that first appeared on the Osborne Clarke LLP website.

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On 6 November 2024, the UK Government published Guidance to organisations on the offence of failure to prevent fraud^[5] under ECCTA, which sets out procedures that relevant organisations can put in place to prevent persons associated with them from committing fraud offences.  The Guidance is only advisory and should not be taken as a substitute for having a thorough and clear understanding of the legislation. The onus will be on an organisation to prove, on the balance of probabilities, that it had reasonable procedures in place to prevent fraud, or that it was unreasonable to expect it to have such procedures in place. 

This article summarises the main points that the Guidance makes on reasonable fraud prevention procedures, all of which sports organisations should look to assess, understand and implement before September 2025:

• Reasonable procedures
• Top-level commitment
• Risk assessment
• Proportionate risk-based prevention procedures
• Due diligence
• Communication (including training)
• Monitoring and review