Bribery Act shines whilst AML supervision struggles

Reports on the Bribery Act 2010 and the Office for Professional Body Anti-Money Laundering Supervision (‘OPBAS’) published this week have given contrasting assessments of the performance of two keystones in the fight against financial crime and corruption.

Overall, the House of Lords Bribery Act 2010 Committee’s post-legislative scrutiny report published on Thursday (14 March) gave a glowing review, declaring it an ‘excellent piece of legislation, which creates offences which are clear and all-embracing’.

Only minor issues were flagged on the law and related guidance, with suggestions that SMEs should be given more assistance on ‘adequate procedures’ to prevent bribery and with conducting business in foreign jurisdictions, although stopping short of suggesting that low-level ‘facilitation payments’ commonly encountered overseas should be exempt from criminal liability.

The Committee’s disapproval was reserved for investigators, with a recommendation that the City of London Police’s anti-bribery training programme be expanded to forces across the country and that the SFO and DPP publish reports on speeding up bribery investigations and improving communication with suspects.

Stepping beyond the bounds of bribery into economic crime more generally, whilst the Committee stopped short of actually endorsing a broader ‘failure to prevent’ offence, its entreaty to the Government to ‘delay no more’ in concluding its deliberations on the issue was certainly no objection.

With regard to Deferred Prosecution Agreements, the Committee emphasised the need to incentivise self-reporting and, more pointedly, concluded that DPAs make it ‘all the more important that culpable individuals be prosecuted’. Topical reference was made to the recent outcomes for Tesco, where no convictions followed a DPA despite three individuals being prosecuted, and Rolls-Royce, where charges were brought following a global settlement worth around £671m.

At the other end of the table, the OPBAS report on themes arising from its 2018 anti-money laundering supervisory assessments published on Tuesday (12 March), painted a less enthusiastic picture. Yet to really enter the public consciousness, OPBAS was founded in February 2018 as the AML ‘supervisor of supervisors’, with a remit to ensure a consistent standard across the 22 Professional Body Supervisors (‘PBSs’) responsible for supervising AML procedures in the legal and accounting sectors, which include the Law Society and the Institute of Chartered Accountant in England and Wales.

OPBAS has spent its first year assessing how the PBSs fulfil their supervisory responsibilities and, unfortunately for the fight against dirty money, there is evidently much to be desired. Offering a smorgasbord of worrying statistics, the report notes that 23% of PSBs undertook no form of AML supervision at all, whilst 18% had not fully identified those they were supposed to be supervising. Only 20% were identified as having appropriate staff competence and training.

A reluctance to issue penalties for AML failings was noted, and a conflict of interest between supervisory responsibilities and members’ interest. An overwhelming majority of accountancy firms expressed concern about the effect of sanctioning members on recruitment and retention.

Ninety-five per cent of the PSBs had some kind of shortcoming in applying the required risk-based approach, with size and turnover being used as arbitrary measures, and insufficient data being collected on more refined indicators of money-laundering risk. The same number of PSBs had issues identified with respect to supervising members, with 54% of accountancy and 44% of legal PBSs deemed to have carried out insufficient supervisory activity.

It is of course entirely unfair to compare the assessments of the Bribery Act 2010 and OPBAS side-by-side. The Bribery Act has had nearly a decade to bed in and much international scrutiny, whereas AML outside the financial services sector has only recently become a headline priority. It is no surprise that OFBAS has made worrying findings in its first year, and those findings are themselves evidence of the need and importance of its work.

If there is a theme which unites these reports, it is that there is in fact little criticism of the underlying legislative regime. Rather, it is resourcing and execution which require our attention.

This article was published in GIR and can be accessed here, behind a paywall.