Justice is blind. At least, that’s the aim of new regulations designed to curb workplace fraud and misconduct. When one person breaches the law, are others responsible? Where does the buck stop? It’s a question that HR needs to know the answer to.

It’s been a rough week for Wells Fargo. After a customer fraud probe, the American bank revealed that between 2011 and 2015, it fired more than 5300 employees for workplace fraud.

Staff are accused of creating fake bank accounts, dummy email addresses and PIN numbers – all without customer’s knowledge or consent. All together, employees gathered an estimated $2.5 million in bogus fees and charges from customers.

“Spurred by sales targets and compensation incentives, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from customers’ authorised accounts without their knowledge,” says a Consumer Financial Protection Bureau (CFPB) report.

In his first public statement since being slapped with a historic USD$185 million fine, the bank’s CEO John Stumpf opened up about the scandal by passing most of the responsibility onto the shoulders of low-level employees.

He insisted that Wells Fargo management knew nothing about the behaviour. “There was no incentive to do bad things,” he told The Wall Street Journal. It’s a claim former employees vehemently deny, and many laid blame for what’s been described as a “pressure-cooker sales culture” right at Stumpf’s feet.

His denials haven’t spared him formal scrutiny either – he is scheduled to testify before the Senate Banking Committee next week, and the Justice Department has opened inquiries into the bank’s sales practices.

Incidents like this have spurred governments and workplaces into action. In the UK, the government is cracking down on workplace fraud by pushing for new laws that would see senior executives and managers prosecuted for a range of financial and economic crimes committed by staff under their watch.

These new laws would expand ‘failure to prevent’ offences. Right now, in the UK those only cover bribery and tax evasion, but could come to include a wider range of economic crimes committed by employees.

“When considering the question: ‘Where does the buck stop and who is responsible for economic crime?’, it is clear that the answer is to be found at every level, from the boardroom down,” says Attorney General Jeremy Wright.

Similar laws are already in the books here in Australia. In a speech last month at an Australian Human Resources Institute (AHRI) networking forum, Fair Work Ombudsman Natalie James described the changing landscape for human resources professionals as one fraught with uncertainty and high stakes.

Federal non-compliance with laws has become a ‘workplace norm’, she says, and this spells trouble for HR; thanks to new regulations, practitioners can be held personally liable for breaches by their employer.

“Compliance with workplace law is not simply a question of tick and flick,” James told attendees. “You can find yourself personally liable for the actions or inactions you help the company take.”

It’s now standard practice for regulators to examine up the chain of command whenever unsavoury practices are discovered. That’s not all – Australia’s government has indicated it intends to increase penalties for breaches of employment law to 10 times what they are now.

The risks of workplace fraud extend beyond legal ramifications. James warns against damage to reputation and brand, not to mention compromised ethics and values, and employee engagement will suffer as well.

Some strategies for recognising and stopping workplace fraud and misconduct are having whistleblower policies in place, clear policies and codes of conduct for staff and managers, and separation of duties.

“We are hopeful that employers will accept that ultimately it is their responsibility under the law to do the right thing,” says James. Although it’s not the sole responsibility of HR to police organisational behaviour, they are best-placed to take a bird’s-eye-view of the entire organisation. Practitioners need to remain vigilant, not just for the sake of the organisation, but for themselves as well.