The Charity Commission issues alert about new failure to prevent fraud offence

Posted: 05/03/2025

The Charity Commission has continued its strong focus on regulatory matters this year, issuing an alert to large charities warning them of upcoming legislation targeting fraud.

What are the changes?

The warning comes as a change in legislation – part of the Economic Crime and Corporate Transparency Act 2023, which aims to enhance transparency and prevent economic crime – will be implemented on 1 September 2025.

The key change is a ‘failure to prevent fraud offence’, which will mean that organisations could be criminally liable if an ‘employee, agent, subsidiary, or other associated person, commits a fraud intending to benefit the organisation and the organisation didn't have reasonable fraud prevention procedures in place’. This will apply regardless of intent or whether senior members of staff knew it was taking place. It states that organisations must now ensure they have adequate fraud prevention measures in place or face fines if convicted.

Which charities does this apply to?

At this stage the offence will only apply to large organisations. For charities this will impact incorporated charities that meet at least two of the three following criteria:

• over 250 employees;
• over £36 million profit; and/or
• over £18 million in assets.

While this offence will only apply to large organisations, the guidance states that regardless of size, it is good practice to ensure that fraud prevention measures are robust.

As fraud is one of the most common types of abuse within the sector, it is important that a charity’s resources are managed responsibly, and it is therefore important that charities:

• identify the risk of fraud;
• take actions to protect themselves;
• check the actions being taken are working.

What next?

Ahead of the offence coming into force on 1 September 2025, charities should read the government guidance on the change, which can be found here.

As part of its alert, the Charity Commission also advised that charities read its guidance about internal financial controls, found here.

As a team, we are able to help you prepare for the upcoming change, so please do not hesitate to get in touch if you would like to discuss the contents of this article.

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