UK’s Failure to Prevent Fraud law may expose firms to unlimited fines and prosecution, says Moody’s compliance risk expert

Around 40% of all crime in the U.K. is fraud, making it a huge problem for banks and consumers. U.K. banks lost £1.17 billion to fraud in 2024, while taxpayers lost between £55 billion and £81 billion to fraud and error in the financial year 2023 to 24. “The scale of the problem is massive,” warns Ted Datta, head of industry practice for financial crime compliance at Moody’s. He says, ”We are living through an era of exponential risk with a sharp rise in digital fraud.”

Datta believes that the U.K. government’s new corporate criminal offence of Failure to Prevent Fraud, which comes into force on September 1, raises a host of questions for financial services firms around culture, due diligence, staff surveillance, procurement policies, and cross-border supply chains. Those that fail to address these adequately face unlimited fines and reputational damage.