Regulatory Roundup 37 contained an article on the publication of FSA guidance on financial crime (which can also be accessed via ‘The Full Handbook’ page on the FSA website under reference ‘FC’). As mentioned in the article, SYSC 6.1.1A now includes a reference to FC.
Although it has only been in existence for four months the FSA has already published a consultation proposing changes to FC in the light of a recent thematic review ‘Anti-bribery and corruption systems and controls in investment banks’. The title is a bit of a misnomer as the FSA makes it clear in 1.1 that “we expect regulated firms in all sectors to consider our findings and examples of good and poor practice ..”. Whilst the FSA does not enforce the Bribery Act (those wishing to report an incident of bribery should contact the Serious Fraud Office) the Regulator does have a statutory objective of reducing financial crime.
The thematic review, which involved visits to 15 firms, identified several weaknesses including a limited understanding of the applicable legal and regulatory regimes; a lack of senior management oversight; and a failure to monitor compliance with anti-bribery and corruption policies and procedures.
Most of the firms visited ranked gifts and hospitality (G&H) as either their highest or main area of risk. Several examples are provided in section 3.6 of the thematic review: both positive (fund managers following policies that prevent them from lunching with the same broker twice in one year), dubious (a £10,000 trip to South Africa for the World Cup for an employee and his wife) and noble (the CEO that distributed the contents of an expensive hamper that he had been given amongst staff). Firms should define limits for G&H where pre-approval is not needed and where it needs to be declared (with appropriate reference to the firm’s conflicts of interest policy: see COBS 2.3.8).
Firms may find the guidance issued by the Ministry of Justice useful – a link can be found in Regulatory Roundup 28.
The consultative guidance follows the normal convention of underlining new, and strikethrough of redundant, wordage so it will be easy for firms to see where the changes are. As mentioned above, it’s not a radical overhaul but rather an enhancement of guidance and examples of good and poor practice. The consultation period ends 29 April.