Advisers should take notice of FSA bribery clampdown
Bribery, whether committed in the UK or abroad, is a criminal offence under the Bribery Act 2010.
The Act introduces a new offence for commercial organisations of failing to prevent bribery. It is a defence for firms charged with this offence to show that they had adequate bribery-prevention procedures in place.
Last month, the FSA published its findings arising out of its thematic review entitled Anti-bribery and corruption systems and controls in investment banks. From August 2011, the FSA visited 15 firms, including eight major global investment banks and a number of smaller operations, to examine how firms mitigate bribery and corruption risk.
As far as the FSA is concerned, the investment banking sector has been too slow and too reactive in managing bribery and corruption risks
The FSA found that despite a long-standing regulatory requirement to mitigate financial crime risk, the majority of firms in its sample did not have robust anti-bribery systems and controls in place and some firms fell short of the FSA’s regulatory requirements.
As far as the FSA is concerned, the investment banking sector has been too slow and too reactive in managing bribery and corruption risks.
The findings with these banks included a limited understanding of the applicable legal and regulatory regimes; incomplete or inadequate bribery and corruption risk assessments; a lack of senior management oversight; and a failure to monitor the effective implementation of, and compliance with, anti-bribery and corruption policies and procedures.
The FSA now proposes to update its regulatory guide for all firms, Financial Crime: A Guide for Firms, with new guidance and examples of good and poor practice drawn from these findings. All firms, including adviser firms, should sit up and take note of this latest FSA thematic wake-up call.
Tracey McDermott, acting director of enforcement and financial crime, said: “Firms across all sectors must have appropriate controls to manage their financial crime risks, whether related to bribery and corruption or otherwise. The FSA and, from next year, the Financial Conduct Authority will continue to focus on financial crime risks in this sector and beyond to ensure firms are meeting their legal and regulatory obligations.”
Philip Ryley is head of financial services and markets for Michelmores LLP