Failure to
Prevent Fraud

The Six Principles That Save You:

Principle 1: Top Level Commitment Why boards can't delegate this responsibility
 

• Governance structures that prosecutors respect - Clear roles, responsibilities, and accountability
   

• Communicating your anti-fraud stance - Making your commitment visible throughout the organisation
   

• Resource allocation that proves commitment - Putting your money where your mouth is
   

• Creating open culture - Encouraging speak-up without fear of retaliation
   

• Board-level oversight - Regular discussion and strategic integration
   

Principle 2: Effective Risk Assessment
 

• The Three-Factor Framework - Opportunity, motive, and means analysis
   

• Two-Part Assessment Process - Identifying risks, then classifying by likelihood and impact
   

• Materiality Focus - Concentrating on risks that are both likely and impactful
   

• Establishing an Audit Trail - Creating defensible evidence of your risk analysis
   

• The Fatal Flaw - Why lacking documented risk assessment destroys your defence
   

Principle 3: Replace with Robust and Proportionate Prevention Procedures 
 

• Reducing Opportunity - Pre-employment checks, fraud impact assessments, procurement controls, robust sign-off processes
   

• Reducing Motive - Fixing incentive structures that encourage fraud, eliminating time pressures that drive corner-cutting
   

• Reducing Means - Strengthening due diligence, role-specific training, conflicts of interest procedures
   

• Detection Systems - Data-driven tools, encouraging speak-up, robust whistleblowing
   

• Proportionality Principle - Tailoring procedures to your business and sector
   

Principle 4: Risk-based and effective Due Diligence
 

• Proportionate Due Diligence - Graduated approach based on actual risk
   

• When Enhanced DD Becomes Essential - Recognising high-risk scenarios
   

• Documenting DD Decisions - Why choosing not to conduct due diligence must be justified
   

• Third-Party Risk Management - Agents, consultants, and service providers
   

• Ongoing Monitoring vs Periodic Review - Balancing thoroughness with practicality
   

Principle 5: Effective Communication to enhance awareness and understanding
 

• Anti-Fraud Policy Development - Clear, accessible guidance that people follow
   

• Role-Specific Training Programmes - Tailored content based on individual risk exposure
   

• High-Risk Individual Focus - Special attention for procurement, finance, and sales teams
   

• Third-Party Training - Extending requirements to associated persons
   

• Whistleblowing Systems - Creating safe reporting channels that people trust
   

• Training Evaluation - Monitoring, reviewing, and measuring effectiveness
   

Principle 6: Continuous Monitoring and Review to maintain compliance 
 

• Periodic Review Cycles - Systematic evaluation of procedure effectiveness
   

• Learning from Incidents - Updating procedures based on failures and near-misses
   

• External Benchmarking - Engaging with professional organisations and examining enforcement actions
   

• Trigger-Based Reviews - When criminal activity demands more robust procedures
   

• Continuous Improvement - Demonstrating ongoing commitment to fraud prevention
   

Your Defence Strategy
 

• Documentation Requirements - What evidence you need to prove reasonable procedures
   

• Proportionality in Practice - Tailoring your approach to your business reality
   

• Integration Opportunities - Building on existing compliance frameworks