The UK's Financial Conduct Authority (FCA) has fined JLT Specialty Limited (JLT) over £1.8 million for failing to have appropriate checks and controls in place to guard against the risk of corruption or bribery when making payments to overseas third parties.
JLT, an insurance broker and risk management service provider, failed to conduct proper due diligence before entering into relationships with partners in other countries who helped JLT secure new business. For those so-called 'overseas introducers,' JLT maintained inadequate systems. It also failed to assess the potential risk of new business secured through the use of overseas introducers from February 2009 to May 2012, the FCA said.
JLT didn't respond to numerous warnings the FCA gave the industry and directly and to JLT directly, the agency said.
"These failings are unacceptable, given that [JLT] 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," said FCA's director, Tracey McDermott. "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."
JLT's practices created an unacceptable risk that its payments to overseas introducers could be used for corrupt purposes -- including paying bribes to public officials or to other persons connected to JLT's insured clients, the FCPA said.
JLT earned almost £20.7 million in gross commission from business provided by the overseas introducers and paid them over £11.7 million in return, the FCA said.
The FCA's fine of just over £1.8 million followed JLT's agreement to settle at an early stage of the investigation and represents a 30% reduction to the original penalty.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.