In January 2017 alone, trade between the US and the UK accounted for more than $7 billion. That’s only one month of business and it’s still more than most industries will see over the entire year. If you work in the financial industry, it’s highly likely—if not entirely necessary—that you’re going to do business with UK firms. You may even have a UK branch of your business. Doing business with UK firms or in the UK means that you’ve likely come in contact with the UK’s Bribery Act, an act similar to the FCPA.
Similar certainly doesn’t mean identical, though. Firms with UK connections need to know the key differences between the acts. They also need to be regularly assessed for compliance with both these acts. Bribery and corruption have no place in businesses, but there are certain activities that blur the line. Having transparent policies in place for UK and US firms will ensure you remain compliant with both acts and avoid corruption.
The UK’s Bribery Act Versus the FCPA
The UK’s Bribery Act and the FCPA have a shared goal: to end corruption and graft in global business relations. Consequently, many of the provisions in both acts are similar. One thing that’s very important to note is that the UK’s Bribery Act covers significantly more than the FCPA. Here are some of the key differences:
- Private versus public entities – While both acts prevent the bribery of foreign officials, the UK’s act expands that to include private businesses as well.
- Direct versus passive – The FCPA is designed to combat direct bribery as well as attempts to conceal it. Meanwhile, the UK’s act accounts for passive acts of bribery, to include taking bribes, and levies actions against organizations that fail to prevent bribes through due diligence.
- Intent versus actions – One of the key components of the FCPA is having corrupt intent, while the UK does not consider intent a necessary component to prove a corruption charge, as long as the action resulted in corruption.
- Penalties versus prison time – In the UK, a violation of the act can result in an unlimited fine, and potentially ten years in jail. In the US, fines are capped at $250,000 per violation while prison time is limited to five years, for individuals.
The key differences you should note are that the UK’s laws and penalties are a bit more stringent than those under the FCPA. The UK also limits what can be considered promotional payments or facilitation payments, which are common areas where entities may blur the line between gift versus graft.
What the Differences Mean for Your Business
When your offices straddle global borders, you need to manage your compliance at a branch level. That means having best practices appropriate for compliance based on the location of the office. Firms dealing with both the Bribery Act and FCPA should:
- Have well developed promotional, event, and gift giving guidelines – These guidelines may vary based on branch, but they should lay out strictly in dollar amounts both appropriate and inappropriate expenses for these categories.
- Manage third party relationships – Companies must do their due diligence when working with third parties, to ensure their ethics and guidelines align with their own
- Offer guidance on facilitation payments – While facilitation payments aren’t technically considered bribes in the US, they should be seen as such. Facilitation payments occur when a company gives money to a foreign official to either secure or speed up the securing of a contract or service. Under the Bribery Act, these are considered bribes.
- Provide regular training on acts pertinent to the region – Employees should be given regular training on the important provisions in the acts that cover their specific segment, as well as any acts they may regularly come in contact with. These trainings can be completed on an annual basis, as well as when laws change, and should incorporate some type of assessment to test compliance.
- Develop a risk assessment program – Employers always hold some potential liability when an employee violates the FCPA or the Bribery Act. That means that these employers need to assess risk within their own organization. This can be completed with a Remote Risk Assessment (RRA) interview. During the interview, the individual can be asked to answer yes or no questions to demonstrate that they’re in compliance with the pertinent act. Those answers will then be subject to analysis and given a risk rating. That risk rating can be used to guide further actions.
- Have an official reporting and response action plan – When the worst happens and a company becomes the subject of an anti-corruption investigation, there should be a specific procedure in place that covers everything from initial fact-finding all the way to considering potential voluntary disclosure programs.
While FCPA compliance is a challenge, often firms must deal with more than just those provisions. The UK’s Bribery Act has its own strict protocols that could also impact your firm. Having set procedures and policies in place is your first defense in managing compliance.
AC Global Risk offers RRA as a tool for managing your compliance. Our Remote Risk Assessment technology can be used to locate and eliminate risk in your firm.
RRA is also used in insurance and other industries to identify risk, reduce fraud and build trust.