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Investment banks likely to face FSA action for poor bribery controls, says lawyer

Thomson Reuters Accelus - Mon, 18 Feb 2013 11:49 GMT
Author: Compliance Complete
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By Martin Coyle A number of investment banks are likely to face Financial Services Authority (FSA) enforcement action this year as a result of poor anti-bribery systems and controls, according to a senior lawyer. Susannah Cogman, a partner at Herbert Smith Freehills, said issues the regulator picked up during its damning thematic review of investment banking firms last year were likely to be working their way through FSA enforcement. "It has been under a year since the thematic review was published, which is not actually very long in terms of FSA enforcement processes. So I would not be entirely surprised to see some final notices later this year," Cogman said. During its wide-ranging review, published in March 2012, the FSA found that firms had failed to take account of its rules before implementing changes resulting from the Bribery Act 2010, which was introduced the previous year. The review, which looked at 15 institutions, including eight unnamed global investment firms, found that "considerable" work was needed to beef up anti-bribery controls. Cogman, who was speaking on a Herbert Smith webinar last week, said that the regulator had been extremely critical of banks' systems and controls but no enforcement action had occurred so far. She said it was rumoured that a number of banks were under or had been referred to FSA enforcement. Intensive and intrusive Cogman said the regulator will aim to publish in the coming months the results of its thematic review of anti-money laundering and anti-bribery controls at asset management firms. The FSA is sampling the controls of 22 firms across the investment management sector and is likely to report in the autumn. Cogman noted that this type of thematic work would remain a key feature of the FSA's, and its successor bodies, approach to financial crime. This will be coupled with a more intensive or intrusive supervision programme looking at the major financial crime risks for larger banks. The FSA extended its core financial crime programme, which initially dealt with anti-money laundering and countering terrorist financing, at the end of last year to cover anti-corruption risks. This will begin, for firms already in that programme, from the middle of this year. The regulator will subject firms to an initial assessment then put them on a four-year rolling cycle of examinations.

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