The legal shift
The UK failure to prevent fraud offence changes corporate risk because liability can arise from inadequate prevention mechanisms rather than direct board participation in the misconduct. ICA’s March 2026 analysis emphasises the SFO’s increasing focus on whether compliance programmes work in practice.
Reasonable procedures
A defensible framework begins with a fraud risk assessment covering products, sales incentives, procurement, third parties, accounting, customer communications and other areas where associated persons could commit fraud for organisational benefit.
Control design
Controls should be linked explicitly to identified risks. Generic anti-fraud policies are unlikely to be persuasive if they do not address the commercial activities most exposed to misconduct.
Testing
Firms should test whether controls operate, not merely whether they are documented. Relevant evidence includes transaction testing, approval sampling, whistleblowing outcomes, investigation trends, exception data and disciplinary action.
Incentives and culture
Fraud prevention can fail when commercial incentives reward behaviour that policies prohibit. Compliance should therefore examine remuneration, sales pressure and management response to control challenges.
Conclusion
The practical standard is moving from paperwork to performance. A corporate fraud programme should be capable of demonstrating that risks were identified, controls were proportionate, implementation was monitored and weaknesses were remediated.
Practical actions for compliance leaders
- Assign clear ownership and document decision rights.
- Test control effectiveness using actual case outcomes rather than policy completion alone.
- Escalate ambiguous or high-consequence cases to appropriately skilled reviewers.
- Track exceptions, overrides, quality assurance findings and recurring root causes.
- Ensure board and senior management reporting focuses on risk and control effectiveness, not only volumes.
- Maintain evidence showing how the firm reached material compliance decisions.
Related reading
See Governance, Risk and Compliance, Corporate Governance and Regulatory Compliance.
About the author
Jonas Adam Mohamed Osman Abdelghafour writes about governance, risk and compliance, anti-money laundering, financial crime prevention, sanctions, customer due diligence, AI governance, model risk and regulatory risk. His work focuses on practical control design, risk-based decision-making and the interaction between regulation, technology and financial services. See About and Qualifications.
Source and editorial context
This article is original analysis informed by a current compliance theme highlighted by the International Compliance Association. The ICA is cited as an editorial/current-issue source; no affiliation with or endorsement by the ICA is claimed or implied.
Frequently asked questions
What should risk leaders know about the legal shift?
The UK failure to prevent fraud offence changes corporate risk because liability can arise from inadequate prevention mechanisms rather than direct board participation in the misconduct. ICA’s March 2026 analysis emphasises the SFO’s increasing focus on whether compliance programmes work in practice.
What should risk leaders know about reasonable procedures?
A defensible framework begins with a fraud risk assessment covering products, sales incentives, procurement, third parties, accounting, customer communications and other areas where associated persons could commit fraud for organisational benefit.
What should risk leaders know about control design?
Controls should be linked explicitly to identified risks. Generic anti-fraud policies are unlikely to be persuasive if they do not address the commercial activities most exposed to misconduct.
What should risk leaders know about testing?
Firms should test whether controls operate, not merely whether they are documented. Relevant evidence includes transaction testing, approval sampling, whistleblowing outcomes, investigation trends, exception data and disciplinary action.
What should risk leaders know about incentives and culture?
Fraud prevention can fail when commercial incentives reward behaviour that policies prohibit. Compliance should therefore examine remuneration, sales pressure and management response to control challenges.