Earlier this month, the UK Serious Fraud Office (SFO) unveiled a significant revision to its corporate self-reporting guidance, aiming to incentivise companies to proactively disclose financial misconduct.
Under the new framework, coming into full effect in September 2025, organisations that self-report fraud will, barring exceptional circumstances, be invited to negotiate a Deferred Prosecution Agreement (DPA). This approach marks a departure from previous practices where self-reporting did not necessarily shield companies from prosecution, potentially deterring them from making disclosures.
On their end, the SFO has offered a commitment to responding within 48 hours of a self-report, deciding on initiating an investigation within six months, and concluding DPA negotiations within another six months; likely hoping that this structured timeline will provide both transparency and efficiency throughout the resolution process.
This policy shift aligns with the "failure to prevent fraud" offence under the Economic Crime and Corporate Transparency Act 2023, which imposes a duty on companies to prevent fraud by employees or agents by introducing the corporate offence of "failure to prevent fraud", aiming to hold large organisations accountable if they benefit from fraudulent activities committed by their employees or agents, unless they can demonstrate that they had reasonable procedures in place to prevent it.
What this means for business and legal professionals
The SFO's revised guidance represents a strategic shift towards encouraging corporate transparency and accountability, lining up the SFO's efforts with other governmental branches such as Companies House and His Majesty's Revenue and Customs.
For legal counsel and compliance officers, the move highlights the importance of robust internal reporting mechanisms and swift action upon discovering potential misconduct, especially if it is within their own institutions. Further, the clear timelines and the possibility of negotiating a DPA also provides a framework for managing legal risks and the reputational damage that can come with protracted legal battles focused on fraud and financial misconduct.