Senior Manager Liability in 2026 and What Businesses Need to Know

Legally reviewed by: Laura Smith Jul 2026 In: Corporate & Financial Crime

Legal Update

The Crime and Policing Bill referenced above has now received Royal Assent. Read our full breakdown of what the Crime and Policing Act 2026 means for businesses under investigation for the latest position.

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) has already introduced a new “senior manager” test for economic crime. The government’s Crime and Policing Act 2026 (CPB) extends that approach meaning that a company can be prosecuted for almost any criminal offence committed by a senior manager acting within the scope of their authority.

This change makes it more likely that board members, senior managers and in-house counsel could face corporate prosecution. It also increases personal exposure for key decision-makers and raises the bar for what is expected in terms of corporate governance and compliance.

Brief Practical Summary

Companies can already be prosecuted for a range of economic crimes (for example fraud and money laundering) where a “senior manager” commits the offence while acting within the scope of their authority, under reforms introduced by the ECCTA.
The Crime and Policing Act 2026 broadens the senior manager attribution test so that it applies to all criminal offences, replacing the much narrower “directing mind and will” standard currently used for corporate liability.
This sits alongside the new “failure to prevent fraud” offence, now in force, which makes large organisations strictly liable for fraud committed by associated persons unless they had reasonable fraud-prevention procedures.
Now that the Crime and Policing Act 2026 is in force, companies that have not clarified senior manager responsibilities, updated their risk assessments or reinforced their compliance systems are much more vulnerable if they face an investigation or enforcement action.

Standard disclaimer: This article provides general information only. It is not legal advice and should not be relied on as such. Specific advice should always be taken on particular facts.

The Current Law on Corporate Criminal Liability and Senior Managers

Traditional Identification Doctrine

Historically, a company could only be convicted of many serious offences requiring a mental element (such as dishonesty or knowledge) if prosecutors could prove that an individual who was the company’s “directing mind and will” (this is typically a board-level figure) had the necessary mental state. This is known as the identification doctrine and has long been criticised for making it difficult to hold large and complex organisations criminally liable.

Reform under the Economic Crime and Corporate Transparency Act 2023

The government has clarified that corporate criminal liability for specified economic offences is now established when a senior manager commits the crime while operating within the boundaries of their actual or perceived authority.

The ECCTA defines a senior manager as an individual who plays a significant role in:

the making of decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised; or
the actual managing or organising of the whole or a substantial part of those activities.

This is a functional test that focuses on the individual’s job role rather than their job title. This may capture regional heads, business-unit leaders, compliance and risk officers and others who exercise real managerial authority, even if they are not statutory directors.

The Economic Crime and Corporate Transparency Act 2023 has been brought into force in stages. Regulations made in March 2025 further introduced new measures relating to the new “failure to prevent fraud” offence.

Changes Under the Crime and Policing Act 2026

Extending the Senior Manager Test Beyond Economic Crime

The Crime and Policing Act 2026 generalises the senior manager attribution test introduced by the ECCTA. The Act creates corporate liability where a senior manager commits any criminal offence while acting within the scope of their actual or apparent authority. This replaces the ECCTA provisions which are confined to economic crime.

Section 130 of the Act, states that where a senior manager of a body corporate or partnership commits an offence within the scope of their authority, the organisation also commits that offence, subject to certain jurisdictional limitations.

The Crime and Policing Act 2026, has now received Royal Assent and is in force. The Act introduces a range of reforms, those of which came into affect from the 29th June 2026.

Wider Scope of Offences

The Crime and Policing Act 2026 extends corporate liability via senior managers far beyond economic crime. The reform applies across the criminal law, so that serious offences such as terrorism, child exploitation, violent disorder and certain weapons offences give rise to corporate liability where committed by a senior manager in the course of their role.

This is a major shift from the previous position, under which the senior manager test applied only to defined economic crimes such as fraud, bribery and money laundering.

What Senior Manager Liability Means in Practice

A Broader Category Than Directors

Under the ECCTA and the proposed Crime and Policing Act 2026, Senior Manager Liability is not limited to registered directors or members of the board. The focus is on individuals who genuinely direct or manage substantial parts of the organisation’s business.

Depending on the structure of the business, this may include:

heads of business units or divisions
regional or country managers
the chief financial officer or head of finance
compliance, risk and legal leaders
operations directors and senior operational managers
those with significant control over high-risk functions such as trading, procurement, sanctions or customer onboarding.

Examples of How Liability Could Arise

While every case turns on its facts, the following scenarios illustrate how Senior Manager Liability could create corporate exposure:

A regional sales director inflates revenue figures by instructing staff to book fictitious orders, in order to meet performance targets. If this conduct amounts to fraud and falls within their managerial role, the company could be prosecuted for fraud based on the senior manager test.
A senior operations manager knowingly permits systematic health and safety breaches in a manufacturing plant to cut costs, resulting in serious injury or death. Under the Crime and Policing Act 2026, the company can face prosecution for health and safety or related offences, attributed via that manager’s conduct.
A head of compliance in a financial services firm deliberately ignores money laundering red flags in order to retain a lucrative client. Their knowledge and decisions may be attributed to the firm, exposing it to money laundering charges.

Senior Manager Liability is therefore not confined to traditional “white-collar” wrongdoing. In combination with the Crime and Policing Act 2026, it exposes organisations to prosecution for a much broader range of offences where serious misconduct occurs within the senior management tier.

Interaction With the Failure to Prevent Fraud Offence

The senior manager attribution reforms sit alongside, rather than replace, the new “failure to prevent fraud” offence created by the ECCTA. Under that offence, large organisations may be criminally liable if they fail to prevent fraud by an associated person (such as an employee, agent or subsidiary) intended to benefit the organisation, unless they had reasonable fraud-prevention procedures in place.

Government guidance, published in March 2025, sets out seven principles for reasonable procedures, including top-level commitment, risk assessment, proportionate controls, due diligence, communication and training, and monitoring and review.

From a Practical Perspective:

failure to prevent fraud liability does not depend on senior manager involvement; it is triggered by fraud by any associated person, subject to size thresholds;
Senior Manager Liability, by contrast, focuses on the acts and mental state of individuals who occupy significant management roles, and the Crime and Policing Act 2026 extends this to a wide range of offences beyond fraud.

Businesses need to consider both frameworks together when assessing corporate exposure and designing compliance programmes.

Practical Steps to Manage Senior Manager Liability Risk

Now that the reforms introduced by the Crime and Policing Act 2026 are in force, businesses should begin strengthening their controls such as:

Map Senior Management Roles

Organisations should identify who qualifies as a senior manager using the ECCTA definition and anticipated Crime and Policing Bill framework. This exercise should consider:

who makes significant decisions about core business activities
who manages substantial parts of the business, whether by geography, product line or function
whether any individuals effectively perform senior roles without holding formal titles.

This mapping should be documented and kept under review as roles and structures evolve.

Re-Evaluate Risk Assessments

Existing financial crime and regulatory risk assessments should be revisited to:

consider the specific risks associated with senior manager decision-making
identify functions where a senior manager could plausibly commit an offence within the scope of their role
incorporate non-economic crime risks (for example, serious exploitation offences, unlawful protest-related conduct or weapons offences) where relevant, reflecting the breadth of crimes covered by the Crime and Policing Act 2026.

Strengthen Governance and Documentation

Boards should review how decisions are taken, recorded and challenged within senior management. In particular, organisations should consider:

whether there are clear lines of responsibility and delegated authority for high-risk areas
how escalation and challenge functions operate in practice
whether key decisions are documented in a way that demonstrates appropriate consideration of legal and compliance risks.

Review Policies, Procedures and Training

Policies and procedures should be updated to:

address the expanded scope of Senior Manager Liability
make clear the expectations placed on senior managers, including around ethical culture and compliance; and
ensure that training for senior managers covers the ECCTA reforms, the new failure to prevent fraud offence and the additional enforcement powers introduced under the Crime and Policing Act 2026.

Enhance Whistleblowing and Speak-Up Mechanisms

Given the increased emphasis on corporate accountability, effective internal reporting channels are essential. They can allow early identification of senior-level misconduct and provide evidence that the organisation took reasonable steps to detect and address issues.

Prepare for Internal Investigations

Firms should ensure they have a clear protocol for conducting internal investigations when allegations arise, including:

criteria for when to instruct external legal advisers
preservation of digital and physical evidence
consideration of self-reporting obligations to regulators or prosecutors.

When to Seek Legal Advice

Given the complexity and pace of change in this area, specialist advice is advisable where:

a senior manager is suspected of serious misconduct, particularly involving dishonesty, financial crime, regulatory breaches or serious harm to individuals.
law-enforcement agencies, regulators or professional bodies have made contact with the business about potential criminal conduct.
the organisation is reviewing or designing fraud-prevention, financial crime or wider compliance frameworks in light of the ECCTA and Crime and Policing Act 2026.
the board wishes to understand its exposure and that of individual senior managers in a specific scenario or sector.

Cartwright King’s corporate and financial crime solicitors advise companies, partnerships and senior individuals on investigations, compliance frameworks and criminal exposure, including corporate internal investigations and complex multi-agency matters. Early engagement can often widen the options for managing risk, remediation and engagement with authorities.

Cartwright King is consistently ranked among the UK’s leading firms in this area: in the 2026 Legal 500 guide the firm secured Tier 1 status for general crime and fraud in the East and West Midlands, with further recognition in the North West and London for white-collar crime work.

Meanwhile, Chambers and Partners 2026 ranks the firm’s crime and financial-crime practice among the top-tier national players, with senior lawyers individually recognised as “leading” or “notable practitioners.”

Frequently Asked Questions About Senior Manager Liability

What is a “senior manager” for the purposes of UK corporate criminal law?

For economic crime offences covered by the ECCTA, a senior manager is someone who plays a significant role in decision-making about how the whole or a substantial part of the organisation’s activities are managed or organised, or in the actual managing or organising of those activities. This is a functional test that looks at what the person does in practice, not just their title. For the Crime and Policing Act 2026, the same definition applies across the criminal law.

Is the Crime and Policing Act 2026 already in force?

Yes. The Crime and Policing Act 2026 received Royal Assent on 29th April 2026, with many other provisions coming into force on 29th June 2026.

Does Senior Manager Liability only apply to large companies?

The senior manager attribution test under the ECCTA is not confined to large organisations; it applies to any company or partnership that falls within the scope of the relevant economic crime offence. By contrast, the separate “failure to prevent fraud” offence applies only to organisations meeting certain size thresholds (based on employee numbers, turnover and assets) The Crime and Policing Act 2026 means that senior manager attribution applies broadly across organisations, regardless of size.

What types of offences could create liability for my business?

Previously, the senior manager test applied to a defined list of economic crimes, including certain fraud, bribery and money-laundering offences. The Crime and Policing Act 2026 extends corporate liability via senior managers to all criminal offences, so that misconduct involving serious violence, exploitation, weapons, terrorism and other serious offences can be attributed to the organisation where committed by a senior manager in the course of their role.

How Does Senior Manager Liability Interact With the Failure to Prevent Fraud Offence?

Senior Manager Liability and the failure to prevent fraud offence are distinct but complementary routes to corporate liability. The failure to prevent fraud offence makes large organisations strictly liable where an associated person commits fraud intending to benefit the organisation, unless they had reasonable fraud-prevention procedures. Senior Manager Liability, by contrast, attributes an offence to the company where a senior manager personally commits it within the scope of their authority. In practice, prosecutors may consider both frameworks when deciding how to charge a case.