Transparent enforcement: corporate liability under ECCTA

June 2026  |  FEATURE | FRAUD & CORRUPTION

Financier Worldwide Magazine

June 2026 Issue

Economic crime, including fraud, money laundering and tax evasion, costs UK businesses hundreds of billions of pounds each year, with more than 70 percent of companies experiencing direct or indirect financial losses.

According to the ‘Economic Crime Survey 2024’, 27 percent of UK businesses experienced at least one incident of fraud in the past year. Of these, around 40 percent were cyber-enabled, most commonly through phishing or other forms of social engineering. Invoice and payment diversion frauds were particularly prevalent, affecting roughly one in 10 victims.

Although economic crime continues to grow in scale and complexity – with criminal networks operating across multiple jurisdictions and rapidly exploiting technological advances such as cryptoassets and artificial intelligence – progress toward strengthening corporate accountability is being made through the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

“The UK government introduced the ECCTA as part of its attempt to tackle economic crime and introduce greater accountability to the corporate register,” affirms Lorna Emson, a partner at Macfarlanes LLP. “Key drivers include an epidemic of fraud in the UK, a surge in money laundering and perceived weakness in the ability of regulators to tackle these issues.”

ECCTA provisions

Representing one of the most significant shifts in UK corporate criminal liability in decades, the ECCTA substantially lowers the threshold for corporate criminal liability for economic crime. In doing so, it strengthens accountability for companies, directors and senior managers.

The legislation includes reforms designed to address the challenges faced by the UK Serious Fraud Office in prosecuting large corporates for economic crimes. These include reform of the identification principle used to determine corporate criminal liability.

The Act also introduces a new strict liability offence for large corporates – the ‘failure to prevent fraud’ (FTPF) offence – which is broader in scope than the equivalent offences under the Bribery Act 2010 and the Criminal Finances Act 2017. Notably, it applies automatically to agents and subsidiaries of in-scope organisations.

“The ECCTA is designed to be preventative and foster a cultural compliance shift, changing the parameters companies operate in rather than focusing only on securing corporate convictions,” says Ms Emson. “To that end, companies are introducing comprehensive ECCTA-compliant fraud policies. But cultural change will not suffice, and prosecutions and fines will need to provide the necessary external compulsion.”

Interplay with extant frameworks

Alongside improving and, in some cases, supplanting existing frameworks, the ECCTA adds much-needed enforcement capability to the UK’s response to economic crime by transforming bodies such as Companies House into more active regulators.

“The Companies Act 2006 contains over 150 criminal offences, far more than is commonly understood,” asserts Ms Emson. “The ECCTA gives many of these offences bite for the first time, by providing the powers and the funding Companies House needs to enforce them.

“Companies now bear the responsibility for reporting and compliance – sometimes referred to as ‘privatisation’ of economic crime,” she continues. “This has been accompanied by the gradual expansion of corporate criminal liability, evidenced in the ECCTA through the ‘senior manager’ test and FTPF offence.”

Both offences, notes Ms Emson, are the latest developments in a broader trend that places increasing responsibility on companies for offences committed by employees. This trajectory can be traced from the introduction of the failure to prevent bribery offence under section 7 of the Bribery Act 2010, through the corporate offence of failure to prevent the facilitation of tax evasion introduced by the Criminal Finances Act 2017, to the introduction of strict civil liability for sanctions breaches under the first Economic Crime Act in 2022.

One notable exception to this trend is money laundering. “Parliament rejected the initial attempt to create a ‘failing to prevent economic crime’ offence as part of the ECCTA, deeming the money laundering obligation too much of a burden on businesses,” adds Ms Emson.

Demand for tools

Given the scale of demand in the UK for more effective tools to tackle economic crime, the ECCTA – which is expected to be fully in force by autumn 2026 – may yet be overtaken by further legislative reform. The Crime and Policing Bill (CPB) 2025 is currently progressing toward enactment.

As the latest stage in the government’s reform of the identification doctrine, the CPB proposes to make it easier for organisations to be held criminally liable for offences committed by senior managers acting within the actual or apparent scope of their authority.

While the CPB could herald a new era in the prosecution of corporate crime in the UK, some commentators are more cautious. They note that previous legislative efforts, including the ECCTA, have yet to translate into a sustained increase in corporate convictions.

“This shortfall is largely because economic crime enforcement is hampered by a lack of sustained resources and expertise, rather than deficiencies in the available legislative toolkit,” explains Ms Emson. “It is often easier for governments to reach for new legislation than to do the costly and unglamorous work of ensuring that enforcement agencies are able to bring long, complex prosecutions.

“Such prosecutions – which take more time and involve more documents than ever before – will eventually be lost at trial, resulting in expensive adverse costs orders,” she continues. “That more difficult challenge remains to be addressed.”

Ultimately, whether the ECCTA becomes a turning point or another well-intentioned statute will depend on the appetite to match transparency with sustained action, and the resolve with which it is enforced.

© Financier Worldwide

BY

Fraser Tennant