- Anti-Bribery Compliance
- January 30, 2012
- Law Firm: Norton Rose Canada LLP - Montreal Office
Additional guidance or more of the same?
The FSA recently published “Financial Crime: a guide for firms” (the FSA Guide), which is applicable to all FSA regulated firms. It follows a consultation exercise that took place over the summer.
The FSA Guide provides regulated firms with advice on how to tackle financial crime risk in a number of different areas, including:
- money laundering;
- data security; and
It also provides guidance on tackling bribery and corruption. This is also covered by the statutory guidance issued by the Ministry of Justice pursuant to the Bribery Act 2010 (the MOJ Guidance).
The FSA Guide contains a summary of the responses to the FSA’s consultation exercise on the guidance provided, including on the prevention of bribery and corruption. Half of the respondents who commented on the guidance on prevention of bribery section thought that it was not helpful for the FSA to publish guidance on anti-bribery measures, given the existence of the MOJ Guidance. The views of those respondents were that the MOJ Guidance is comprehensive, and is the guidance to which the prosecutors will look when determining whether there has been an offence under the Bribery Act.
The FSA’s response to this feedback has been to continue to include guidance on anti-bribery measures within the FSA Guide. This has been done because the FSA’s remit is wider than policing the Bribery Act. In fact, the commentary in the FSA Guide expressly states that the FSA is not concerned with enforcing the Bribery Act.
Rather, the FSA is concerned with the wider task of ensuring that regulated firms have in place suitable systems and controls to mitigate financial crime risk, which includes bribery and corruption. The commentary in the FSA Guide is clear that the FSA can and will take enforcement action against regulated firms for failing to have in place anti-bribery systems, even if there is no evidence that such failure has actually resulted in bribery taking place.
However, the guidance offered by FSA Guide is not very different from that offered by the Ministry of Justice (albeit less detailed).
Similarities to MOJ Guidance
The FSA guidance is set out under four heads:
- Governance - the substance of which equates to the MOJ Guidance’s ‘Tone from the Top’ section;
- Risk assessment;
- Policies and procedures - which mirrors the MOJ Guidance’s requirement for proportionate procedures; and
- Dealing with third parties - which reflects the due diligence requirements of the MOJ Guidance.
The section at the beginning of the FSA Guide of general applicability to all types of financial crime risk contains sections covering effectively the requirements of the ‘Communication and Training’ and ‘Monitoring and Review’ principles of the MOJ Guidance.
The FSA insists that the FSA Guide should not be used by regulated firms as a “tick list” for financial crime systems and controls, and it is really not sufficiently detailed for it to be used as that. The FSA has also stated that its staff will not view it as such, and so long as there are genuine reasons for a firm taking a different approach than that outlined in the FSA Guide, backed up by a risk assessment, that firm should not find itself subject to enforcement action for having inadequate systems and controls.
For firms regulated by the FSA that have already implemented anti-bribery procedures by reference to the MOJ Guidance, there is unlikely to be much, if anything, that needs to be updated to ensure that the procedures are in line with the guidance set out in the FSA Guide. Nonetheless, the FSA is clear that it will take enforcement action against firms that do not have adequate systems and controls, even if no act of bribery has occurred, and it would therefore be wise to review and consider the FSA Guide to ensure that there are no gaps in systems and controls that could be criticised by the FSA.