Preparing for the Economic Crime and Corporate Transparency Act

4. Tighter Scrutiny by Regulators

Across the board, regulators in the UK – most notably the Charity Commission – are intensifying their focus on internal controls and financial oversight.

Rising public concerns about economic crime and the desire to maintain donor trust mean charities must tighten their defences against fraud. Any visible gap could trigger an investigation, so it’s no longer enough to rely on outdated policies or assume “it won’t happen to us.”

You’ll need to confirm that every department within your charity, from finance to programme delivery, aligns with new regulatory expectations.

5. Financial Crime Landscape

The ECCTA is also a direct response to growing anxieties about money laundering, fraud, and other financial crimes. Fraudulent activity is a financial drain that can tarnish your charity’s reputation, undermine public confidence, and impact the very communities you serve.

Whether you’re managing local projects or international aid, reputational harm can have a long-lasting ripple effect – one that no trustee board wants to confront.

6. Deadline and Preparedness

Finally, time is of the essence. The “failure to prevent fraud” provision officially comes into force on 1 September 2025, but that deadline can approach faster than you might expect.

Trustees need to review current processes, revise any outdated policies, and adopt targeted anti-fraud measures well before the law takes effect.

Proper documentation is crucial to track improvements, highlight areas needing attention, and provide evidence of your due diligence if regulatory questions arise later.

Forward-thinking charities are already revamping internal systems to close any gaps that fraudsters could exploit.

Below are practical measures to guide your preparations, each tailored to meet the heightened expectations of the UK Charity Commission and the new ECCTA requirements.

1. Refine Top-Level Commitment

Strong leadership sets the tone. Your board and senior managers must champion anti-fraud policies and lead by example. A trustee board that visibly supports robust checks and balances shows staff and volunteers alike that fraud prevention is baked into the charity’s DNA.

Why It Matters: If senior managers send mixed signals or fail to uphold policies, potential fraudsters may sense an opportunity. Strong leadership involvement also helps demonstrate to regulators that your organisation’s prevention culture is alive and well.

Practical Steps:

• Allocate sufficient resources for fraud prevention (both time and budget).

• Hold periodic board-level discussions on internal fraud trends.

• Encourage staff to report concerns without fear of reprisal.

2. Conduct Thorough Risk Assessments

Knowing where vulnerabilities lie is half the battle. Whether it’s payment processes, partnership arrangements, or large-scale grant distribution, you need a detailed map of potential weak points.

Why It Matters: Regulators expect charities to identify and prioritise areas susceptible to fraud. This approach helps you build targeted controls rather than one-size-fits-all solutions.

Practical Steps:

• Arrange workshops to brainstorm hypothetical fraud scenarios.

• Use data analytics tools to flag unusual transactions.

• Update risk registers regularly, especially following major organisational changes.

What areas to target?

• Procurement: Review how you vet suppliers. Do staff have the ability to override standard procedures in emergencies?
• Donations: Scrutinise direct payment methods. Are large gifts recorded transparently and cross-checked?

3. Build Proportionate Procedures

There’s no universal blueprint for anti-fraud protocols, but each charity’s measures must be in line with its size, complexity, and the level of risk it faces.

Why It Matters: A small charity might get by with simpler processes, but larger organisations need more sophisticated layers of defence. Under the ECCTA, your procedures must be “reasonable” or proportionate, demonstrating that you’ve done your homework.

Practical Steps:

• Develop department-specific guidelines (e.g., finance, HR, procurement).

• Align these procedures with existing Charity Commission guidance on internal financial controls.

• Keep policies updated and easily accessible to all staff.

4. Communicate and Train Effectively

No matter how robust your policies are on paper, if staff and volunteers don’t understand them, they won’t be effective. Clear communication fosters a culture where everyone knows how to spot and report anomalies.

Why It Matters: According to the UK Government’s guidance, training is central to demonstrating that you take fraud risks seriously. Without it, your charity may struggle to show it had reasonable measures in place.

Practical Steps:

• Conduct routine training sessions for employees, including scenario-based exercises.

• Disseminate updated fraud policies through newsletters and staff meetings.

• Offer a confidential channel where suspicions can be reported safely and clarify the steps that will follow.

What areas to target?

• Frontline Programmes: Ensure field staff know how to handle and record cash transactions.
• Digital Platforms: Provide awareness of phishing attempts and the importance of secure logins.

5. Monitor, Review, and Adapt

Fraud tactics evolve. A procedure that worked flawlessly last year might prove insufficient next year. Monitoring your protocols is, therefore, a continual process, not a one-and-done exercise.

Why It Matters: This continuous improvement mindset aligns with the “monitoring and review” principle highlighted in multiple ECCTA commentaries. Regulators appreciate proactive adaptation, and it bolsters your defence if you ever need to prove you took fraud risks seriously.

Practical Steps:

• Schedule regular audits.

• Track red flags or near-misses in a database and investigate swiftly.

• Encourage a cyclical approach: assess, adapt, retrain, and refine.

Why Now?

The charity sector thrives on trust and goodwill. If the new ECCTA provisions catch a charity unprepared, the fallout can be severe: crippling fines, public embarrassment, and a dent in donor confidence.

Trustees have a fiduciary duty under UK Charity Commission rules to safeguard assets and ensure that funds are used effectively for charitable purposes. Failing to implement strong anti-fraud procedures could be seen as a breach of those duties.

Moreover, the Commission’s focus on accountability continues to intensify. Trustees are expected not only to comply with the law but also to actively demonstrate that compliance in a way that resonates with stakeholders.

A transparent, proactive approach to fraud prevention can reassure donors, reassure beneficiaries, and strengthen the foundation of your charitable work.

One Partner for Support

Charity Accounting Partners can assist trustees with in-depth reporting and training sessions for your team, ensuring that financial records are accurate and that vulnerabilities are flagged before they become critical threats.

By integrating strong anti-fraud processes with professional accounting practices, your charity can confidently move forward in this changing legislative environment. Get in touch with us today for a free evaluation!

Conclusion (and a Farewell Question)

The Economic Crime and Corporate Transparency Act is a transformative milestone in the UK’s battle against fraud. For charities, particularly larger ones, the new “failure to prevent fraud” offence heightens accountability and demands immediate action.

Trustees who embrace these new responsibilities will find themselves not only meeting regulations but potentially strengthening donor relations and public trust. The steps outlined here – from board-level leadership to ongoing monitoring – are key pillars of a solid anti-fraud framework.