Firm fined £1.8million for "unacceptable" approach to bribery & corruption risks from overseas payments

Published: 19/12/2013     Last Modified: 30/08/2015

The Financial Conduct Authority (FCA) has fined JLT Specialty Limited (JLTSL) over £1.8million for failing to have in place appropriate checks and controls to guard against the risk of bribery or corruption when making payments to overseas third parties.

JLTSL, which provides insurance broking and risk management services, was found to have failed to conduct proper due diligence before entering into a relationship with partners in other countries who helped JLTSL secure new business, known as overseas introducers. JLTSL also did not adequately assess the potential risk of new insurance business secured through its existing overseas introducers.

Tracey McDermott, the FCA's director of enforcement and financial crime said:

"These failings are unacceptable given JLTSL actually had the checks in place to manage risk, but didn’t use them effectively, despite being warned by the FCA that they needed to up their game.  Businesses can be profitable but firms must ensure that they take the necessary steps to control the risks in that business.

"Bribery and corruption from overseas payments is an issue we expect all firms to do everything they can to tackle. Firms cannot be complacent about their controls – when we take enforcement action we expect the industry to sit up and take notice."

JLTSL's failure to manage the risks created by overseas payments, which occurred between 19th February 2009 and 9th May 2012, breached the FCA’s principle on management and control.

During this period, JLTSL received almost £20.7 million in gross commission from business provided by overseas introducers, and paid them over £11.7 million in return.

Inadequate systems around these payments created an unacceptable risk that overseas introducers could use the payments made by JLTSL for corrupt purposes, including paying bribes to people connected with the insured clients and/or public officials.

At the FCA’s request, JLTSL also varied its permissions until such time as the FCA was satisfied that JLTSL could adequately mitigate the risk of making payments to overseas third parties.

JLTSL’s penalty was increased because of its failure to respond adequately either to the numerous warnings the FCA had given to the industry generally or to JLTSL specifically.  The fine of £1,876,000 follows JLTSL’s agreement to settle at an early stage of the investigation. As a result, it qualifies for a 30% reduction on the original penalty of £2,684,013.

Notes for editors

  1. The Final Notices for JLT Specialty Limited (JLTSL).
  2. Overseas Introducer means an overseas third party that helps a frim (in this case JLTSL) to win and retain business from clients based in overseas jurisdictions.
  3. JLTSL failed to manage the risks created by overseas payments, so the FCA has taken action against JLTSL for failing to meet principle 3 of the FCA’s principles for business.
    • Principle 3 requires firms to manage their business, and risks, responsibly and effectively.
  4. On the 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  6. Find out more information about the FCA.

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