As you may know, the FCA recently fined JLT Specialty Ltd (now part of the Marsh Group) £7.88million for failings around its management of risks around financial crime.
JLT failed to take reasonable care to organise and control its affairs for countering bribery and corruption risks, which arose from making payments to third parties (“introducers”) who helped JLT win and retain business.
What did the Regulator find?
In its notice, the FCA found the following issues with JLT:
- Between 2013 and 2017, through a chain of JLT companies and third-party introducers in Panama and Colombia, $3m in bribes were paid to government officials to help win and keep business.
- Employees did not raise potential red flags when the introducers were being taken on by JLT.
- JLT did not properly consider or approve the onboarding and renewal of relationships with these third-party introducers.
- No additional monitoring of the introducers was carried out and some general policies and procedures were not followed properly.
With the increased focus of the regulator on financial crime (not only with JLT, but Ghana International Bank has also been recently fined), we suggest that brokers consider their own operations and financial crime framework, to ensure they can show they have taken reasonable care to organise and control their affairs for countering financial crime risks.
So, what should you do?:
- Risk register– Given the focus on financial crime from the regulator, we would suggest noting this on your risk register along with ways in which you are mitigating this- to help comply with SYSC 3.1.1.
- Third party provider (TPP) policies and procedures– please review your current policies and procedures both around financial crime (sanctions, anti-money laundering, bribery & corruption, and third-party provider onboarding procedures) to ensure they are up to date and are known by your staff- to comply with SYSC 6.1.1.
- Training: Ensure your staff have carried out financial crime training in the current year so they are aware of their responsibilities to notify you if they see any red flags as required by SYSC 6.3.7.
- Financial Crime Risk Assessment (FCRA): Also consider carrying out a financial crime risk assessment to understand whether money laundering/financial crime poses a risk to your business. You may find that given your client base, distribution channels, your products or the focus of your business, there is nothing to worry about. However, being able to evidence this shows you have systems and controls around your business as required by SYSC 6.3.3.
