The FCA has recently fined Besso Limited, a general insurance broker, £315,000 (reduced from £450,000 for early settlement) for failing to have proper systems and controls in place to counter the “unacceptable risk” that commissions it shared with third parties could be used for corrupt purposes.

The FCA has made it clear that ensuring brokers improve their systems and controls in this area is a priority and the Besso case appears to be the opening shot from the FCA in a likely sustained campaign.

What can we learn from Besso?

The Besso case serves as a stark reminder that the FCA continues to prioritise anti-bribery and corruption compliance enforcement in the insurance sector and that there will almost certainly be more investigations in this area.

Historic anti-bribery and corruption compliance failings will be targeted

Of particular note is that historic failings remain vulnerable to investigation by the FCA; in Besso’s case, the FCA punished breaches of Principle 3 of the FCA’s Principles for Businesses going back as far as January 2005 – that is to say, over five years before the Bribery Act 2010 (the “Act”) was implemented.

This is really quite a harsh approach given that, for many corporates, it was only with the advent of the Act that the potential risks of bribery, in the sweeping sense that term is used in the Act, really became apparent in their risk analyses. However, notwithstanding possible historic ignorance, the fact remains that penalties for historic anti-bribery or corruption systems failures are now clearly in play and likely to become more common.

Specific anti-bribery procedures are necessary regardless of bribery and corruption risk

The fact that a broker’s business is not, overall, subject to a high bribery and corruption risk and that it has other financial crime compliance procedures in place (for example, concerning anti-money laundering and fraud) will not exempt it from FCA scrutiny of its specific anti-bribery and corruption policies or procedures.

In other words, regardless of whatever anti-money laundering procedures you have, you must also have in place the specific sorts of adequate policies and procedures contemplated by Section 7 of the Act, which implement rigorous counterparty risk assessment, due diligence, record-keeping and monitoring to guard against the payment of bribes by your organisation.

http://www.memerycrystal.com/Articles/30-04-2014/avoid-potential-fca-fines.aspx#page=1