Financial Crime Time - Your update from RPC: 2025 Q3

The new corporate offence of failure to prevent fraud came into effect on 1 September 2025. This offence was introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023), which came into force in October 2023. This follows an implementation period during which companies had nine months to ensure they had in place necessary fraud prevention measures.

Under the offence, large organisations can be held criminally liable for fraud offences committed by their "associated persons" (including employees, agents, subsidiaries and some third party service providers). The offence applies to "large" organisations incorporated anywhere in the world, that is to say, organisations that meet at least two of the following criteria:

• 250 or more employees;
• a turnover of £36m or more; and/or
• assets of £18m or more.

In addition, subsidiaries of large organisations will also, irrespective of their size, be liable for fraud offences committed under English law by their employees.

A company charged under this offence has only one defence, which is to show that it had “reasonable procedures” in place to prevent fraud at the time the underlying offence occurred. Failure to implement these measures could leave organisations exposed, unable to rely on the only available defence. The consequences are significant: a conviction may result in unlimited fines, reputational damage, and increased regulatory scrutiny.

For more details, see the Home Office guidance, and, in particular, the steps companies should take to implement "reasonable procedures". This can be found here.

Additionally, the Crown Prosecution Service and the Serious Fraud Office published joint updated guidance for prosecutors around dealing with corporate prosecutions. This can be found here.

HM Revenue & Customs (HMRC) has initiated its first corporate prosecution under the "failure to prevent the facilitation of tax evasion" offence, introduced by the Criminal Finances Act 2017 (CFA 2017).

This offence imposes strict liability on companies, partnerships, and other bodies corporate. An organisation may be held criminally liable if an "associated person", such as an employee, agent, or contractor, knowingly facilitates tax evasion, and the organisation lacked reasonable prevention procedures at the time. Significantly, prosecutors do not need to prove intent, knowledge, or involvement by senior management for liability to arise. Upon conviction, organisations face unlimited financial penalties.

Bennett Verby Ltd, an accountancy firm based in Stockport, has been charged under section 45 of the CFA 2017 in connection with an alleged research and development tax credit repayment fraud in excess of £16m. Additionally, six individuals, including a former director of the firm, face charges related to cheating the public revenue and money laundering. All appeared in Manchester Crown Court on 7 August 2025. A provisional trial date is set for 27 September 2027.

This case represents a notable turning point in HMRC’s enforcement strategy, following years of criticism over its inaction and failure to exercise these powers since their introduction eight years ago.

In addition to commencing its first prosecution of the "failure to prevent the facilitation of tax evasion offence", HMRC has also published data demonstrating its current and recent enforcement activity relating to that offence. That includes a further 11 active investigations, as well as a further 27 cases under review. As of 30 June 2025, HMRC stated that its enforcement activity included:

• one corporate charging decision under section 45 (failure to prevent facilitation of UK tax evasion – discussed above)
• 11 live investigations
• 27 potential cases under active review
• 121 opportunities have been reviewed and rejected
• cases span 13 sectors, including software, labour provision, accountancy, legal services, and transport.

HMRC states in its announcement that its focus is not on the number of prosecutions but on driving cultural and behavioural change, encouraging organisations to implement reasonable prevention procedures and reduce the risk of tax facilitation.

HMRC will publish updates to this data twice a year. Organisations concerned about potential breaches can self-report through HMRC’s corporate reporting portal.

HMRC's announcement can be found here.

On 23 July 2025, the UK Supreme Court overturned the fraud convictions of former City traders Tom Hayes and Carlo Palombo, marking the conclusion of a decade-long legal battle over alleged interest rate manipulation.

Mr Hayes, convicted in 2015 for alleged manipulation of the London Interbank Offered Rate (LIBOR), and Mr Palombo, convicted in 2019 for offences relating to the Euro Interbank Offered Rate (EURIBOR), both maintained that their actions reflected accepted market practice, not criminal conduct.

Following applications to the Criminal Cases Review Commission (CCRC), their cases were referred to the Court of Appeal in 2023. Although the Court of Appeal upheld their convictions in March 2024, the Supreme Court ultimately ruled that the convictions could not be sustained.

The CCRC has since invited other traders who believe they may be affected by this decision to come forward.

The Serious Fraud Office (SFO) has charged six individuals connected to the storage company Store First following a major investigation into the alleged misuse of £75m in pension funds invested in storage units across northern England and Scotland.

All six individuals face charges of conspiracy to defraud. Additional charges of money laundering and perjury have been brought against certain defendants.

The case concerns a scheme operated between 2011 and 2014, in which more than 1,900 UK-based investors transferred their pensions into self-invested personal pensions to buy storage units marketed by Store First. According to the charges, investors were told they would earn income from leasing the units and were allegedly misled about guaranteed returns and the readiness of the units to be leased. The charges also state that the investors were misled about potential tax liabilities arising from the receipt of upfront payments connected to the scheme.

SFO Director Nick Ephgrave described the charges as the culmination of a “complex investigation” and an important step toward justice for investors.

Further details can be found here.

The SFO has recovered £1.1m through the sale of a Lake District property, marking its first successful use of an Unexplained Wealth Order (UWO).

Investigators linked the five-bedroom home, Hope Springs House, owned by Claire Schools, to criminal proceeds from a multi-million-pound investment fraud orchestrated by her ex-husband, Timothy Schools. The property, purchased using illicit funds, was sold in April 2025 following the High Court’s UWO issued in January.

Timothy Schools, sentenced in 2022 to 14 years’ imprisonment for defrauding investors in legal case financing schemes, diverted over £19m for personal gain and transferred more than £1m in criminal proceeds to associates and relatives.

SFO Director Nick Ephgrave said the agency will continue to use every available power to recover the proceeds of crime from those who benefit indirectly.

The SFO’s investigation into Mr Schools’ assets remains ongoing.

Further details can be found here.

On 15 October 2025, the Office of Financial Sanctions Implementation (OFSI) released its Annual Review. The report sets out details of OFSI’s activities for the 2024-2025 financial year, describing the focus of the agency's work around three pillars: capability, compliance and enforcement.

As set out in the report, during the last financial year, OFSI was managing 240 active investigations, with an increasing share of cases identified independently rather than through self-reporting (151 in 2024/25, up from 108 the previous year). During the same period, 57 enforcement actions were taken, including issuing monetary penalties, warning letters, public disclosures, and regulatory referrals, with the financial services and legal sectors most frequently impacted.

The implementation and enforcement of Russia-related sanctions has remained OFSI’s top priority, with £28.7bn in assets reported as frozen under the UK’s Russia sanctions regime. Of particular, note, was the 31 July 2025 imposition of a £300k penalty on Markom Management Limited for breaching UK Russia sanctions by instructing a payment of £416,590.92 to a designated person, underscoring OFSI’s continued focus on robust and proportionate sanctions enforcement.

For further details, see the OFSI Annual Review 2024/25.

For further details on the penalty on Markom Management Limited for breaching UK Russia sanctions, see here.

HMRC has issued a warning to the public after securing the first ever conviction for promoting tax fraud via social media.

Habeeb Ajaga, a 21-year-old student from London, pleaded guilty to two counts of encouraging fraud in contravention of section 46 of the Serious Crime Act 2007 after using Instagram to promote criminal attacks on the UK’s VAT system. He was sentenced at Southwark Crown Court on 16 October 2025 to 16 months’ imprisonment, suspended for two years.

HMRC stated it continues to strengthen its IT security to counter evolving cyber threats, supported by additional funding announced at the June 2025 Spending Review.

HMRC's statement with further details of the prosecutions can be seen here.