business with confidence icaew.com 22 february 2012 bribery & corruption!
TRANSCRIPT
BUSINESS WITH CONFIDENCE icaew.com
Felicity Banks, Head of Business Law
Bribery and Money Laundering
Requirements in the UK
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INTERNATIONAL BUSINESS CRIME
Business crime is mostly a matter of domestic law (modified by common/civil law traditions and Commonwealth co-ordination). Exceptions are:
• International agreements– Unmonitored
– Mutual evaluation
• Extraterritorial action
• National embarrassment and arm twisting
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BRIBERY AND MONEY LAUNDERING
Money Laundering– Financial Action Task Force (FATF)
– EU Directives
Bribery– OECD Convention
– US Foreign Corrupt Practices Act (FCPA)
– UK Bribery Act
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THE UK BRIBERY ACT 2010
• Core offences of paying or receiving a bribe
• Specific offence of bribing a foreign public official
• Corporate offence of failure to prevent bribery
• Offences for senior officers, consenting or conniving to one of the other offences
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THE BRIBERY ACT 2010 – THE CORE OFFENCES
• in good faith• impartially; or • where the person involved is in a position of
trust
The core offences relate to the giving or receipt of ‘inducements’ to improperly perform a function expected to be carried out:
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THE BRIBERY ACT 2010 – THE CORE OFFENCES
‘Improperly perform’ defined in terms of the expectations of persons performing those functions in the UK – even if the functions are carried out abroad
UK citizens will be held to UK standards of behaviour, wherever they are located – unless local ‘written law’ provides for different standards
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THE BRIBERY ACT 2010 – THE CORE OFFENCESThe offences apply whenever:• Any part of the offence (including but not limited
to the improper performance) takes place in the UK; or
• All parts of the offence take place outside the UK, but the offender is:– A UK citizen, or overseas citizen,– Ordinarily resident on the UK,– A UK incorporated body
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THE BRIBERY ACT 2010 – THE CORE OFFENCESThese offences go beyond OECD convention
requirements in that:• There is no exemption for ‘small facilitation
payments’• Bribe receivers are covered as well as bribe
payers (action can be taken against foreign nationals being paid in the UK)
• All bribes, not just bribes to obtain business or a business advantage
• Bribes to private persons, not just public officials
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THE BRIBERY ACT 2010 – BRIBERY OF FOREIGN PUBLIC OFFICIALS Additional offence, to ensure full implementation of OECD Convention
Any financial advantage paid, offered or promised:– Intending to influence foreign officials, in
performance of their functions;– Intending to obtain or retain business or a
business advantage.
No improper performance is required
‘Functions’ defined in UK terms, unless ‘applicable written law’ differs
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THE BRIBERY ACT 2010 - THE CORPORATE OFFENCE
Commercial organisations (including partnerships) commit offence if any person associated with them bribes another person intending to obtain or retain business or a business advantage for them.
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THE BRIBERY ACT 2010 - THE CORPORATE OFFENCEThis offence can be committed not just by UK companies, but by any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom
‘Associated persons’ includes anyone who performs services on behalf of the organisation – may specifically include employees, agents or subsidiaries, but is not limited to them
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THE CORPORATE OFFENCE – ADEQUATE PROCEDURES
• Defence to the corporate offence to have adequate anti-bribery procedures, covering all associated persons
• Statutory guidance on adequate procedures specifically required by Bribery Act and now in place
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THE CORPORATE OFFENCE – ADEQUATE PROCEDURES
Six principles for bribery prevention:
1. Proportionate procedures
2. Top level commitment
3. Risk assessment
4. Due diligence
5. Communication (including training)
6. Monitoring and review
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DIFFICULT AREAS
• Hospitality & promotional expenditure
• Duress
• Facilitation payments
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AML LEGISLATION
• Proceeds of Crime Act 2002 / Terrorism Act 2000
Definitions of money laundering and terrorist financing offences and requirements to report to the FIU (The Serious Organised Crime Agency – SOCA)
• Money Laundering Regulations 2007
Systems requirements for the regulated sector including CDD, reporting systems, and supervision
• CCAB Guidance
Must be taken into account by courts
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PROCEEDS OF CRIME AND TERRORISM ACTS
• Suspicion reporting regime – no routine transaction reporting
• All crimes reporting
• No de minimis
• Inclusion of passive “laundering” (inclusion of proceeds of own crime)
• Criminalisation of non-reporting
• “Tipping-off” offence
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MONEY LAUNDERING REGULATIONS 2007
• Client Identification and on-going monitoring
• Suspicion Reporting Procedures
• Record keeping (5 years after end of client relationship)
• Internal control
• Staff training and communication
• Supervision
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CLIENT DUE DILIGENCE
• Independent documentary evidence of name & address of client
• Risk based approach to CDD
• Beneficial Owners
• Continual monitoring
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REPORTING
• Internal reports to MLRO
• Reports to Serious Organised Crime Agency (SOCA)
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REPORTING TO SOCA
• Reason to be suspicious
• Criminal offence not civil wrong
• On-line reporting form
• Consent requests
• Exemption in privileged circumstances
• Guarding confidentiality
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FURTHER INFORMATION
www.icaew.com/bribery
www.icaew.com/moneylaundering
Library enquiries
Technical Advisory Helpline
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AML - cases and opportunities
Paul Simkins, Director of Quality Assurance
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Outline
• What to look out for – 3 recent cases
• AML Supervision for practice members
• AML Benchmarking for practice members
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Improper: accountant behaving badly
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Improbable: massaging the figures
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Impossible: highly geared grandmother
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AML Supervision for practice members
Practice members of GAA bodies:
• Can choose ICAEW to be their supervisor
• Can be supervised via our Practice Assurance (PA) scheme under contract
• Can get valuable help and support with access to leading brains in the field
• Can join a useful and proportionate scheme to help maintain good practice standards
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Benchmarking
Purpose – share good practice, raise standards
• Pilot group benchmarked in Q1 2011– Many performing too much CDD (on low risk clients)– Some not conducting sufficient monitoring & training
• Further sample initiated in Q1 2012
• Output: group overview or bespoke assessment
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Imelda Moffat, Manager, Information Law & Legal Services
Legal update
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Example of slide notes • Enlightened shareholder value – what does it mean?• Codifying the common law requirement to act in the company’s best interest. Directors must act in a way that
promotes company success for the benefit of shareholders as a whole, and in doing so must have regard where appropriate to:
– long-term factors– interest of other stakeholders (eg, employees, suppliers and customers)– community and environment– company reputation.
• Government guidance is available at www.berr.gov.uk/files/file40139.pdf
• Other useful links are http://www.berr.gov.uk/whatwedo/businesslaw/co%2Dact%2D2006/ and• http://www.companieshouse.gov.uk/companiesAct/companiesAct.shtml
• And some ICAEW links are: icaew.com/companylaw• CA06 and major accounting changes: icaew.com/index.cfm/route/156108/• FFM CA06 Summary: icaew.com/index.cfm/route/148125/
• GOODIE ! There is a useful and short leaflet summarising the changes for private companies available at www.berr.gov.uk/files/file42262.pdf
• There is also a more detailed one at www.berr.gov.uk/files/file42261.pdf and• www.companieshouse.gov.uk/companiesAct/pdf/berrUpdatingYourClients.pdf• And finally• BERR is now BIS - Department for Business Innovation and Skills – as of June 2009
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Topics
• Employment
• Pensions
• Professional reform
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Employment
• 2012 - A year of big changes – rights to claim unfair dismissal
– the tribunal system
– introduction of fees
• Research carefully and take advice
• Availability of good resources
• Interim Management Group at ICAEW
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Status
• Employee
• Worker
• Self employed
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Recent changes
• Agency Workers Regulations 2010– In force from October 2011
– Blurs lines between agency workers and employees
– Aim for equal treatment in pay and conditions between agency workers and hirers’ permanent employees
• Equality Act 2010– In force from October 2010
– Consolidation
– Protected characteristics
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Pinch points
• Give a statement of employment within 2 months
• Plan early on business sales and restructuring and assess position
• Look out for TUPE changes in the future
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Retirement
• Default retirement age of 65 abolished October 2011– Employees in transition
– Growth in Golden Goodbyes?
• Possible however if ‘Objective Justifications’ exist
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The Seldon case
• Heard by the Supreme Court in January 2012 – decision awaited
• Mr Seldon forced to retire at 65 in accordance with partnership deed
• ‘Avoids the need to expel partners through performance management, thus contributing to the congenial and supportive culture in the firm’
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Pensions
• Imelda’s test…….
• Distinguish between a ‘defined benefits scheme’ and a ‘money purchase’ scheme
• Big changes in 2004– Pensions Regulator
– Pensions Protection Fund
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Practicalities - moral hazards regime • Notifiable events
• Contribution Notices and Financial Support Directions
• Advance Clearance procedure – for corporate deals; capital restructurings, dividend payments
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Auto Enrolment 2012 Watershed
• Auto-enrolment with compulsory employer contributions
• Revised timetable issued January 2012
• October 2012 – largest employers first, steep scale and affecting those with – Less than 50 employees - August 2015
– Less than 30 employees – January 2016
• Automatic staging dates dependent on PAYE reference
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Specifics
• Age 22 upwards (but younger can elect)
• Includes permanent, temporary and agency workers
• Administration hurdles – Investment in systems
– Review of existing schemes
– Prepare for self certification
– Guidance for trustees
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Arrangements
• Choose Qualifying Scheme(s)– Is existing scheme compliant?
– Two tier arrangements needed?
– Feeder schemes?
• NEST scheme– National Employment Savings Trust
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Pensions regulator starting to flex muscles ?
• Lehman and Nortel – October 2011– Large insolvent groups
– Costs rank as insolvency expense and therefore in priority to preferred creditors, floating charge holders, unsecured creditors
• Boxclever - January 2012– FSD issued by the pensions regulator against ITV Television in
respect of a joint venture deal in 2000
– Pensioners left attached to a weak subsidiary overloaded with debt after cash stripped out
– Support must remain in place until scheme winds up
– ITV is appealing the decision
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Legal services reform
• Why?
• Legal Services Act 2007– Legal Services Board - LSB
– External ownership and investment – ‘Tesco Law’
– First true MDPs involving lawyers and other professionals
– Alternative business structures – ABS
• Slater and Gordon – a firm over there now involved over here - February 2012
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ICAEW concerns
• The procedure ……. And delays in thought process
• Divergent views on nature of ‘legal advice’
• Timing - first ABS operational in October 2011
• Distinguish between:– External ownership
– Work types - personal injury and conveyancing
– Work structures – multi disciplinary practices
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Considerations
• You or your client could be a– Participant
– Manager
– Investor
• Appetite depends on business model, size, niche– Consider MDPs to save costs
– Tax services
– Forensic and insolvency specialists
– Novel structures and relationships for service delivery
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The future
• Legal competitors will be looking at you, your clients and your business offering
• Innovate – you or your clients may want to add specialised services or enter into collaborative arrangements
• Remember its professional services reform