FSA bares teeth over failures of bribery controls
Yesterday the Financial Services Authority (FSA) published the findings of its review into anti-bribery and corruption (ABC) systems and controls. In August 2011, after the Bribery Act had come into force, 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.
The FSA found that the majority of firms had inadequate systems and controls in place. In particular, the FSA identified:
- nearly half the firms in their sample did not have an adequate ABC risk assessment;
- only two firms had either started or carried out specific ABC internal audits;
- there were significant issues in firms’ dealings with third parties used to win or retain business;
As a result of its review the FSA is considering whether further regulatory action is required in relation to certain firms.
Tracey McDermott, acting director of enforcement and financial crime, commented: “It is imperative that firms have adequate arrangements to control the risks of financial crime. We have seen examples of good practice and some examples of poor practice. Overall, despite the high profile of the issue, the investment banking sector has been too slow and too reactive in managing bribery and corruption risks."
The FSA has already been active in anti-bribery and corruption enforcement, having fined AON £5.25m in January 2009 and Willis £6.89m in July 2011 for failing to have adequate systems and controls in place. This review indicates the FSA's continued aggressive commitment to enforcement in this area. Unlike the Bribery Act, which requires proof that a bribe was paid before a commercial organisation itself can be liable, the FSA can enforce for systems failures alone (without needing to show any bribery actually took place). For those businesses regulated by the FSA these developments reinforce the need to ensure adequate ABC procedures are in place.
To view the FSA's review please click here