NEWS
Corporate Fraud Prevention
Global efforts to combat corporate fraud are intensifying. Key areas of focus include payment fraud, cybersecurity, crypto-assets, and greenwashing.
UK’s Reform Efforts
The UK’s Economic Crime and Transparency Act 2023 (ECCTA) introduces a “failure to prevent fraud” offence for large organizations. It also extends the attribution doctrine to hold corporations accountable for senior managers’ actions. The Serious Fraud Office (SFO) aims to expedite fraud cases and enhance its prosecutorial role, following successful high-profile prosecutions. The UK Government’s Fraud Strategy commits substantial funds to law enforcement and the new UK Fraud Squad, with Labour promising further fraud strategy reforms and tech platform involvement to reduce online fraud.
EU’s Approach
France has reversed its stance on corporate successor liability, allowing criminal liability to transfer to successor entities. Deferred Prosecution Agreements (DPA) are now established tools for settling corporate criminal investigations. New guidelines have been published to formalize factors for penalty reductions, though individual liability remains uncertain.
Payment Fraud
Globally, elections have driven legislative focus on consumer fraud protection in the payment services sector. The UK mandates bank reimbursement for Authorised Push Payment (APP) fraud, while the EU proposes similar measures. The US prefers banks to voluntarily compensate customers, with the Senate Banking Committee urging banks to enhance anti-fraud procedures.
Cybercrime
Cybercrime remains a priority. France’s new cyber police agency, OFAC, will enhance cross-border cooperation. The UK’s Metropolitan Police and National Crime Agency have made significant strides against online fraud and ransomware attacks.
Crypto-assets
Regulatory approaches to cryptocurrencies vary. The EU’s Markets in Crypto-Assets Regulation (MiCA) will introduce comprehensive safeguards. The UK has interim regulations, focusing on anti-money laundering and financial promotion of crypto-assets, with plans for phased regulatory updates. The US lacks a unified framework, relying on state-level initiatives like New York’s BitLicense and proposed legislation for comprehensive crypto-asset regulation.
Greenwashing
Greenwashing is emerging as a critical area. The US SEC has enforced settlements for ESG misstatements. The UK FCA has issued anti-greenwashing guidance, while the EU plans new regulations and a directive to address misleading environmental claims by 2026.
Conclusion
There is a global trend towards stricter regulation and enforcement to combat corporate fraud. The impact of these reforms remains uncertain, especially with changing governments. Businesses must stay informed, adapt quickly, and manage risks as regulatory actions increase.
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