Agenda item

Report attached.

The Cabinet considered a report of Councillor Vanessa Alexander, Portfolio Holder for Resources and Council Operations, informing members about the Economic Crime and Corporate Transparency Act 2023, which became applicable from 1^st September 2025.

The Leader of the Council outlined the recommendation, which was to approve the guidance and policy document.

Approval of the report was not deemed a key decision.

Reasons for Decision

New offences had been created by the Economic Crime and Corporate Transparency Act 2023.  The Legislation was applicable from 1^st September 2025.  Section 199 of Economic Crime and Corporate Transparency Act 2023 created a new offence that would hold Hyndburn Borough Council to account for fraud committed by their employees, agents, subsidiaries, or other associated persons who provided services for or on behalf of the Council.  The fraud must have been committed with the intention of benefiting the Council or its clients.  It did not need to be demonstrated that the Council’s Directors or Senior Management ordered or knew about the fraud.  It did not need to be proven there was any benefit for the Council.  The offender could simply say that was their intention in the fraud they carried out.

Under the Act, Hyndburn Borough Council might be criminally liable if it did not have reasonable fraud prevention procedures in place.

The offence would sit alongside existing law.  For example, the person who had committed the fraud might be prosecuted individually for that fraud, while Hyndburn Borough Council might be prosecuted for failing to prevent it.

The Council would have a defence if it had reasonable procedures in place to prevent fraud, or if the Council could demonstrate to the satisfaction of the court that it was not reasonable in all circumstances to expect the Council to have any prevention procedures in place.

The overall risk to Hyndburn Borough Council of a fraud which fell with the remit of this legislation was believed to be relatively low, as the fraud must have the basis to directly benefit the Council or its clients and not just the perpetrator of the fraud which was the most common result of most frauds.  The Council must have a policy in place which set out the Council’s position as to the legislation and how it dealt with it.

The Guidance and Policy Document appended to the report was part of a group of policies which inter-link and collectively formed part of the Council’s Anti-Fraud culture and governance framework.  The existing policies that this would sit alongside included the Anti-Fraud, Corruption and Bribery Policy, Criminal Facilitation of Tax Evasion Policy and the Anti-Money Laundering Policy.

As part of the steps needed to demonstrate a robust defence, the Head of Audit & Investigations intended to carry out refresher training on Fraud, Corruption and Bribery which would also include the key aspects of the new policy surrounding the Economic Crime and Corporate Transparency Act 2023.  Project leads, especially where not a Council employee would also be made aware of this policy.

The Guidance and Policy Document detailed who to report an issue to and the policy would be regularly reviewed and updated if any changes were necessary.

There were no alternative options for consideration or reasons

Resolved                                    -    That Cabinet approves the Economic Crime and Corporate Transparency Act 2023 – Failure to Prevent Fraud – Guidance and Policy Document, as set out in the report at Appendix 1.