Why smaller firms still care

If your organisation is well below the large organisation thresholds, it might be tempting to file the failure to prevent fraud offence under "not our problem". That would be a mistake, for several reasons.

Individuals are always liable

The corporate offence changes who else can be prosecuted, not who can be prosecuted. Any individual who commits fraud is personally criminally liable under the Fraud Act 2006, whatever the size of their employer. A sole trader who submits a false invoice and an employee of a ten-person firm who fiddles expenses face exactly the same law as anyone at a multinational.

Supply chains push requirements down

Large organisations manage their own risk by managing their suppliers. If your firm sells to companies caught by the new offence, expect their due diligence questionnaires, contract clauses and audits to ask what fraud prevention procedures you have. Firms that can show a fraud risk assessment, payment controls and staff training will find it easier to win and keep that business. Firms that can't will increasingly look like a risk their customers don't want to carry.

You can be the associated person

The offence covers frauds committed by persons associated with a large organisation, and that can include a smaller company providing services on its behalf. If someone at your firm commits fraud that benefits a large client, your firm sits at the centre of their criminal exposure. That is not a comfortable place to be, commercially or legally.

Small firms feel losses hardest

Finally, the practical point. Smaller organisations have thinner margins, smaller cash reserves and fewer people to notice something is wrong. A diverted payment that a large company absorbs as a bad month can put a small firm's payroll at risk. Fraud prevention is not a compliance luxury for big companies. It is basic financial self-defence for everyone.