Navigating the new fraud landscape: leveraging technology to mitigate people risk and ensure organisational compliance

Understanding people risk within an organization has become increasingly crucial in light of the new "failure to prevent fraud" offence set to take effect on September 1, 2025, in the UK.

This corporate criminal offence, introduced as part of the Economic Crime and Corporate Transparency Act (ECCTA) 2023, holds large organisations accountable if they profit from fraud committed by their associated persons.

The Importance of People Risk Assessment

Under this new legislation, organiations can be held criminally liable if an employee, agent, subsidiary, or other "associated person" commits fraud with the intention of benefiting the organization. This makes it imperative for companies to have a comprehensive understanding of the people risks within their structure.People risk encompasses various factors, including:

1. Employee background and history
2. Access to sensitive information and systems
3. Financial pressures or conflicts of interest
4. Behavioural patterns and anomalies

To mitigate these risks, organiations must implement robust fraud prevention procedures. The UK government has published guidance outlining the types of measures expected, which include risk assessment, due diligence, and monitoring.

Challenges in Assessing People Risk

Identifying high-risk individuals within an organisation can be challenging, especially for large companies with numerous employees and complex structures. Traditional methods of risk assessment, such as manual background checks and periodic audits, may not be sufficient to detect subtle indicators of potential fraud.

Leveraging Technology for Compliance

This is where advanced technology solutions, such as Meysey, can play a crucial role in helping organizations stay compliant with the new legislation. Meysey utilises artificial intelligence to perform automated fraud governance checks across a company's financial ecosystem and associated persons landscape (including employees, partners, and consultants). Key features of Meysey that can assist in identifying high-risk individuals include:

1. Automated background checks on suppliers, customers, and employees
2. Payroll analysis to identify ghost employees and unusual patterns
3. Expense validation to detect fraudulent claims
4. Identification of conflicts of interest, such as employees linked to companies within the supply chain

By leveraging AI and cloud-based technology, Meysey can continuously monitor financial data and user behaviour, alerting organisations to potential risks in real-time. This proactive approach allows companies to address issues before they escalate into full-blown fraud cases.

Benefits of Technology-Driven Risk Assessment

Implementing technology solutions like Meysey offers several advantages in the context of the failure to prevent fraud offence:

1. Comprehensive coverage: AI-powered systems can analyse vast amounts of data across various departments and systems, providing a holistic view of people risk.
2. Real-time monitoring: Continuous analysis allows for the immediate detection of suspicious activities or behavioural changes.
3. Objective assessment: AI-driven analysis removes human bias and ensures consistent evaluation of risk factors.
4. Scalability: Automated systems can easily adapt to growing organizations and changing regulatory requirements.
5. Evidence of compliance: In the event of an investigation, organisations can demonstrate their proactive approach to fraud prevention, potentially serving as a defence against the failure to prevent fraud offence.

Conclusion

As the deadline for compliance with the new failure to prevent fraud offence approaches, organisations must prioritize understanding and mitigating people risk. While traditional risk assessment methods remain important, integrating advanced technological solutions like Meysey can significantly enhance an organisation's ability to identify high-risk individuals and prevent fraud. By combining human expertise with AI-powered analysis, companies can create a robust defence against fraud, ensuring compliance with the new legislation and fostering a culture of integrity within their organisations. As the fraud landscape continues to evolve, embracing technology will be key to staying ahead of potential threats and maintaining a strong financial governance framework.