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Financial institutions in the frame: UK Bribery Act
Practical Law UK Legal Update 5-502-2141 (Approx. 3 pages)
Financial institutions in the frame: UK Bribery Act
by Holly Howarth, Norton Rose LLP
| Published on 04 May 2010 |
This article is part of the PLC Global Finance April 2010 e-mail update for the United Kingdom.
Speedread
The UK Bribery Act 2010 has significant implications for all industries. The financial services industry, already under attack on a number of fronts, is no exception to this. As a result of the Act, financial institutions should carry out a comprehensive anti-corruption risk assessment. This should form part of, and inform, a robust compliance programme as this will be essential to establish the adequacy of an institution's procedures to avoid potential corporate liability. Failure to do so risks exposing directors to potential civil liability. This article outlines a few of the areas institutions should focus on.
The UK Bribery Act 2010 (Act) is widely considered to be broader and more robust than the US Foreign Corrupt Practices Act 1977 and its recent enactment has significant implications for all industries. The financial services industry, already under attack on a number of fronts, is no exception to this. Norton Rose's briefing on the Act sets out ten key considerations for businesses and, in particular, highlights its far-reaching extra-territorial scope. As a result of the Act, financial institutions should carry out a comprehensive anti-corruption risk assessment. This should form part of, and inform, a robust compliance programme as this will be essential to establish the adequacy of an institution's procedures to avoid potential corporate liability. Failure to do so risks exposing directors to potential civil liability.
Areas of focus should include:
- Money laundering compliance. Bribery offences are reportable under the Proceeds of Crime Act 2002 and, in an era of close co-operation between the enforcement authorities, the assumption must be that these reports will inevitably make their way to the Serious Fraud Office.
- Aiding and abetting. Deemed knowledge of corrupt practices (including turning a blind eye to such activity) could expose financial institutions to liability for participation in a criminal offence.
- Gifts and entertainment. A wholesale re-evaluation of policies and procedures is required.
- Intermediaries. The FSA's interim findings on anti-bribery and corruption in commercial insurance brokers illustrates the sensitivities in this area. In the light of the Aon case, effective training, the monitoring of relationships with overseas third party agents and the creation of a central register are all essential.
- Aggressive hiring practices. The poaching of teams may involve bribes and, while prosecutorial discretion will of course play a significant role, this serves to illustrate the breadth of the Act.
- Investment. Investments in emerging markets can expose participants to corruption charges, as set out in our briefing on individual exposure in this area.