Yesterday the FSA fired further shots at the regulated sector when it fined Willis Limited £6.895m for failings in its anti-bribery and corruption systems and controls. The FSA alleges that “these failings created an unacceptable risk that payments made by Willis to overseas third parties could be used for corrupt purposes”. Although unrelated to the Bribery Act 2010, which came into force on 1 July, the timing is significant given the emphasis on anti-bribery and corruption within the City.
Representing the largest fine imposed by the FSA in relation to anti-financial crime systems and controls, this clearly sends a message that the FSA continues to take anti-bribery and corruption very seriously. In May last year the FSA published the results of its thematic review into these issues. With the advent of the Bribery Act, commercial insurance intermediaries in particular and all other regulated firms must beware the increased political and regulatory focus on systems and controls to prevent bribery and corruption. The FSA has signalled that it will now look at anti-bribery and corruption controls within investment banks.
As stated, the action against Willis is completely unrelated to the Bribery Act and related to events long before the Act came into force. The Act creates criminal offences for corporates that fail to prevent bribery but those in the regulated sector already have a requirement to put in place effective antifinancial crime systems and controls. Firms facing the same difficulties today might find that a similar FSA fine would be used as prima facie evidence of inadequate procedures which would render a firm liable for the corporate offence under the Act if any specific bribery offences were also committed.
The timing of this announcement by the FSA, whether by coincidence or design, sends a strong message to the Serious Fraud Office (the lead investigator and prosecutor under the Bribery Act) that the FSA remains the lead City regulator and will continue to take the lead in combating financial crime. To date, the SFO has been looking at the City in terms of compliance with the Act and the City’s response to its ‘adequate procedures’ requirement.
Any regulated firm that is not up to speed with its anti-financial crime systems and controls or (in the language of the Bribery Act) does not have ‘adequate procedures’ to prevent bribery, could now feel the full force of the FSA and, for conduct since 1 July, face criminal proceedings. It will have to be all hands on deck if such systems are not yet in place.
When stress-testing existing systems, it is essential that firms have in place a comprehensive and considered risk assessment. Once risks have been identified, adequate procedures to counter those risks can be embedded and, through full communication of the message throughout the business (evidenced by appropriate training), firms can show themselves to be compliant. Further stress testing of such systems are a must to show ongoing compliance.