Investment banks still need to work against bribery – FSA

The UK Financial Services Authority (FSA) has declared that most investment banks still do not have adequate anti-bribery and corruption controls despite the UK Bribery Act being enforced almost a year ago.

The regulator published the findings of its thematic review into such systems and controls in investment banks on March 29. The study was conducted from August 2011 onwards; the FSA visited eight major global investment banks and seven smaller institutions to examine how they mitigate bribery and corruption risk.

The FSA concluded that “the investment banking sector has been too slow and reactive in managing bribery and corruption risk”. Common weaknesses included not carrying out specific internal audits, not having an adequate risk assessment, and not properly taking into account the FSA’s rules covering bribery and corruption.

“Although we were frequently told about high expected standards of ethics and ‘zero tolerance’ of bribery and corruption, most firms had historically failed to ensure adequate systems and controls to identify, manage and control the bribery and corruption risks to which they were exposed,” the regulator said.

Richard Indge, a London-based partner in Ernst & Young’s fraud investigation and dispute services practice, believes companies need to prioritise these controls to keep up with the constantly changing regulatory landscape. “Risk assessments are a key tool in understanding the anti-bribery and corruption risks faced by a business, and must be regularly reviewed and updated as external and internal bribery and corruption risks change,” he explains.

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