What is Economic Crime?
- Economic crime encompasses a range of illegal activities involving money, finance, or assets, carried out to gain profit or advantage, or to cause loss to others. These crimes cause significant harm to individuals, businesses, and society by:
- Enabling criminals to profit from their crimes or fund further criminal activity.
- Damaging the financial system and undermining legitimate businesses. Eroding trust in the UK’s financial reputation.
- Threatening the UK’s prosperity and national security.
The government is committed to tackling economic crime and illicit finance. Achieving this goal requires the combined efforts of law enforcement, regulators, businesses, and the public.
CILEx Regulation’s role in preventing and detecting economic crime
As an AML supervisor and a proactive regulator supporting the UK government’s sanctions regime, CILEx Regulation (CRL) recognises its responsibility to help prevent and detect economic crime within its regulated community. This commitment is embedded in CRL’s regulatory objectives and reflected in the expectations set out in the CILEX Code of Conduct.
All regulated individuals and firms are required to comply with the Code of Conduct. Principle 4 specifically states:
Comply with your legal and regulatory obligations and deal with regulators and ombudsmen openly, promptly and co-operatively. You must understand and comply with the law and regulation applicable to you.
CRL expects those it regulates to take active steps to prevent, identify, and report economic crime, and to comply fully with relevant legislation designed to protect society from financial harm. Where there is evidence of non-compliance with legal obligations, CRL may take appropriate disciplinary action.
To support compliance, CRL provides guidance and resources. The links on this page offer practical help on key areas such as anti-money laundering and financial sanctions.
The Economic Crime and Corporate Transparency Act 2023 and the Ninth Regulatory Objective
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) came into force on 26 October 2023, introducing important reforms to help tackle economic crime in the UK. One of its key changes was the addition of a new regulatory objective to the Legal Services Act 2007:
Promoting the prevention and detection of economic crime.
This new objective places a legal duty on regulators like CILEx Regulation (CRL) to take active steps in preventing and detecting economic crime within the legal services sector.
What is Economic Crime?
Under ECCTA, economic crime includes a wide range of offences, such as:
- Fraud
- Money laundering
- Bribery and corruption
- Tax evasion
- Terrorist financing
- False accounting
- Financial services misconduct
It also covers attempts, conspiracies, and assistance in committing these offences, even if the conduct occurs outside the UK but would be considered criminal if done here.
CRL’s commitment
CRL is working closely with the Legal Services Board and other legal regulators to develop shared principles and expectations for meeting this new objective. Our goal is to ensure that legal professionals are equipped to:
- Recognise and respond to risks of economic crime
- Comply with relevant laws and regulations
- Act transparently and responsibly in their professional conduct
While the new objective applies to regulators, it reinforces the importance of compliance for all those we regulate.
Supporting our Regulated Community
CRL provides guidance and resources to help individuals and firms understand their responsibilities, especially in areas like anti-money laundering and financial sanctions. We expect our regulated community to take reasonable steps to prevent and report economic crime, and we will take appropriate action where there is evidence of non-compliance.
For more information and practical support, please explore the links and resources available on this page as well as the wider website.
Failure to prevent fraud – new offence from September 2025
A new corporate criminal offence, failure to prevent fraud, came into force on 1 September 2025, introduced under the Economic Crime and Corporate Transparency Act 2023 (ECCTA). This legislation is designed to drive a cultural shift in how large organisations approach fraud prevention, placing legal responsibility on them to take proactive steps to stop fraud committed by individuals acting on their behalf.
What is the offence?
Under the new law, an organisation can be held criminally liable if a person associated with it, such as an employee, agent, or subsidiary, commits a specified fraud offence intended to benefit the organisation, and the organisation did not have reasonable fraud prevention procedures in place.
Importantly, senior management does not need to have ordered or known about the fraud for liability to apply. The offence is intended to discourage passive oversight and encourage active governance.
Who does it apply to?
The offence applies to large organisations, defined as those meeting two or more of the following criteria in the financial year prior to the fraud:
- More than 250 employees
- More than £36 million in turnover
- More than £18 million in total assets
These thresholds apply to each legal entity, including subsidiaries and parent companies.
How can organisations avoid liability?
To defend against prosecution, organisations must demonstrate that they had reasonable procedures in place to prevent fraud. The UK Government has outlined six guiding principles to help organisations meet this standard:
- Top-level commitment: Senior leadership must actively support and promote anti-fraud measures.
- Risk assessment: Identify and evaluate fraud risks across all areas of the business.
- Proportionate procedures: Implement controls that are appropriate to the level and nature of risk.
- Due diligence: Know who you’re working with and assess their risk profile.
- Communication and training: Ensure staff and associated persons understand fraud risks and reporting procedures.
- Monitoring and review: Regularly assess and improve fraud prevention systems.
Why it matters?
Fraud accounts for over 40% of all crime in the UK. This new offence aims to protect victims, including businesses, by holding organisations accountable and encouraging stronger internal controls. It also levels the playing field for businesses that already take fraud prevention seriously.
Economic Crime Objective – strengthening the Legal Sectors response
In October 2023, a new regulatory objective came into force under the Legal Services Act 2007, requiring legal regulators and authorised persons to promote the prevention and detection of economic crime. This objective was introduced through the Economic Crime and Corporate Transparency Act 2023 (ECCTA) and reflects the growing importance of tackling financial crime across all sectors.
On 30 July 2025, the Legal Services Board (LSB) published its final statutory guidance on how regulators should implement this new duty. The guidance sets out four key expectations for legal regulators:
- Understand and act on risks that could lead to the legal sector facilitating economic crime.
- Support authorised persons to understand their duties and the risks they face.
- Monitor compliance with standards designed to prevent and detect economic crime.
- Regularly evaluate whether those standards and procedures remain effective and fit for purpose.
Failure to prevent fraud – new corporate offence
From 1 September 2025, a new offence of failure to prevent fraud applies to large organisations under ECCTA. This offence holds organisations criminally liable if someone associated with them, such as an employee, agent, or subsidiary, commits fraud for their benefit, and the organisation did not have reasonable fraud prevention procedures in place.
Organisations are encouraged to act now by reviewing:
- Fraud risk assessments
- Staff training programmes
- Oversight of third-party relationships
The Home Office guidance outlines six principles for reasonable procedures: top-level commitment, risk assessment, proportionate controls, due diligence, communication and training, and ongoing monitoring.
National Risk Assessment 2025 – key findings for Legal Services
The UK’s fourth National Risk Assessment (NRA), published by HM Treasury on 17 July 2025, highlights several evolving threats:
- Money laundering remains a high risk across the UK.
- There are stronger links between sanctions evasion and kleptocracy.
- Cryptoassets are increasingly used in mainstream laundering typologies.
- The legal sector is particularly exposed through:
- Conveyancing and property transactions
- Trust and Company Service Provision (TCSP)
- Misuse of client accounts
Firms are advised to update their Practice-Wide Risk Assessments (PWRAs) and internal controls to reflect these findings.
CRL’s AML statements – understanding fraud risk
Each year, CRL firms are required to complete AML Statements, which now include questions about fraud; specifically, whether the firm has been a target or victim of fraudulent activity. These insights help CRL:
- Understand the nature of fraud risks facing regulated firms
- Identify areas where additional support or guidance may be needed
For further information, guidance documents, and practical resources, please explore the links provided on this page and the wider website.
Who is involved in the UK’s Economic Crime Response?
The UK’s response to economic crime is a collaborative effort and it starts with our regulated individuals and firms:
Additional resources
Gov.uk Economic Crime and Corporate Transparency Act 2023 – factsheets
The threat of economic crime – CRL’s AML Feature in the CILEX Journal (Autumn 2024)
CRL’s monthly newsletter – includes regular Economic Crime updates and guidance
CRL’s Economic Crime updates
Home Office Economic Crime Quarterly Newsletter
Please contact info@cilexregulation.org.uk with any queries.
