global insurance management

Bribery Act 2010

Jun 24 2010

Bribery Act 2010

This slipped under the radar, in the last few weeks of the last Labour government, and is receiving considerable coverage as one of the most draconian pieces of anti-corruption legislation in the world!

Action required: Firms need to establish ‘systems and controls’ to prevent illicit payments or inducements being made, either in the UK or overseas, to win business. We will provide an updated financial crime procedure, incorporating actions arising from this legislation. However, you need to review the following document and let us know if you think you have any specific issues.

Firms should be aware of the FSA’s ongoing interest in this subject and the impact of the legislation (which for most UK businesses should be minimal).

The FSA has published its latest piece of light reading on “anti-bribery and corruption in commercial insurance broking”. Despite its title, the FSA expects all firms to review the findings in the report and ensure that they have adequate procedures in place that will prevent any inappropriate gift, entertainment or other inducement being made or offered to generate business. It is not limited to overseas payments.

The Bribery Act 2010 comes into force in stages and in full effect from 01 October 2010 and creates:

• a general offence of offering or receiving a bribe;
• a specific offence of bribing a foreign public official; and
• a corporate offence of failing to prevent bribery.

As with other areas of its business, a firm should take a risk-based approach to this issue, taking into account their business profile and customer base and be able to demonstrate that it has adequate procedures in place to prevent bribery and corruption.

The FSA report and the new legislation act as reminders to us of actions that will help protect firms against any allegations not only of bribery and corruption but also the wider area of financial crime. To protect yourself, you will need to complete the following steps:

• allocate responsibility for all aspects of financial crime to a Director/Partner;
o senior management must have an understanding of all the risks involved.

• identify whether third-parties are involved in the business operation, that appropriate checks have been carried out on them and that a written agreement exists between all parties for any payments made;
o third-parties should be thoroughly researched and their involvement established as necessary and beneficial,
o any payments should be made directly to a bank account in the name of the third party, in a recognised bank and properly recorded.

• review existing arrangements for gifts, hospitality and entertaining and ensure a complete record is kept of what is both given and received;
o includes receipt or offer of gifts, meals or tokens of appreciation or gratitude, or
o invitations to events, functions or other social gatherings, and
o are acceptable if they fall within reasonable bounds of value and occurrence.

• review the intentions surrounding any political or charitable donations, lobbying activities and sponsorships;
o corporate activity should not be used to disguise a personal position.

• maintain high levels of payment and accounting control for all bank accounts, cash and petty cash;
o adopt approval procedures for third-party payments,
o be wary of payments in cash,
o set appropriate limits on expenses claims.

• monitor business areas for any conflicts of interest;
o conflicts of interests should be identified and managed on an on-going basis,
o a written policy document should be available.

• ensure employees are aware of the firm’s whistleblowing provisions;
o involves a safe, reliable and confidential way of reporting any suspicious activity.

• use robust recruitment procedures;
o have a stricter vetting process for staff in sensitive or higher risk positions,
o be aware of what steps may be taken by recruitment agencies used.

• carry out regular training on anti-bribery and corruption measures;
o maintain records of all training undertaken.

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