Jurisdiction(s):
United Kingdom

ECCTA 2023 failure to prevent fraud: UK fund managers' liability, portfolio company risks, placement agents and the reasonable procedures defence

Published on: 02 September 2025

Published by a Law360 reporter

Legal News

Article summary

From 1 September 2025, the ECCTA 2023 will have further implications for managers when the failure to prevent fraud (FTPF) offence comes into force. Managers must be able to evidence that they understand and have assessed how the ECCTA 2023’s FTPF provisions affect their businesses and compliance arrangements.

They should demonstrate that they have taken account of the government’s FTPF guidance, issued in November 2024 (see: Home Office announces implementation of corporate 'failure to prevent fraud' offence, LNB News 01/09/2025 9).
They will also need to evaluate the impact of the FTPF provisions on current and planned fund investments, including stakes in portfolio companies and ties with service providers, such as placement agents, who help bring investors into the funds.
For managers with contractual and regulatory obligations to exercise due skill, care and diligence to prevent loss to the assets they manage, FTPF considerations are not unfamiliar; however, the possibility of criminal liability should intensify the compliance emphasis on FTPF...

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