Advice firm JLT Specialty has been fined £7.8m by the Financial Conduct Authority (FCA) for failures around financial crime control including allowing a more than $3m bribe to take place.
It is the second such sanction for the firm as the FCA previously fined it £1.9m in December 2013 for similar risk control failures around overseas introducers and bribery and corruption.
Both of these issues took place before the business was taken over by Marsh in 2019.
In this latest instance the regulator originally issued an £11.26m penalty but JLT Specialty agreed to settle early so qualified for a 30% reduction, taking the total fine down to £7,881,700.
In issuing the fine the FCA detailed how payments had been used to ensure the firm would remain the broker for a major aviation insurance contract, after it was threatened with losing the client.
The FCA noted that a number of individuals have been convicted in the United States of conspiracy to launder money in connection with these payments.
And the unnamed state-owned insurer which eventually received the payments involved is also in the process of being liquidated by Presidential Decree on account of its corrupt practices.
Commission payments made to third-party
The firm placed business in the London reinsurance market for JLT Re Colombia, another company in the JLT group – this business had been introduced by a third-party based in Panama.
Between 21 November 2013 and 6 June 2017, JLT Specialty paid $12.3m in commission to JLT Colombia Wholesale Limited, the parent company of JLT Re Colombia, which in turn paid $10.8m to the third-party introducer, the FCA said.
This introducer then paid more than $3m to government officials at a state-owned insurer in an unnamed country in order to help retain and secure their business for JLT Specialty and JLT Re Colombia.
As a result of the investigation the FCA found that JLT Specialty failed to manage its business and risks responsibly and effectively.
However, it added that the firm’s self-report in June 2017 and assistance, including providing investigators with access to materials from JLT Group’s internal investigation, were mitigating factors when determining the appropriate level of financial penalty.
Mark Steward, executive director of enforcement and market oversight, said: “Lax controls by JLT Specialty meant, ultimately, that money flowed into the pockets of corrupt officials.
“It is because of risks such as this that we are maintaining our focus on financial businesses’ financial crime systems, taking action where these firms fall short.”
A spokesperson for Marsh, which now owns JLT Specialty, said: “This matter relates to a former employee of JLT who pleaded guilty to charges arising from actions that took place in Ecuador from 2014 – 2016, prior to the acquisition of JLT in 2019.
“In early 2018, JLT voluntarily reported this matter to law enforcement authorities. As previously disclosed, we have cooperated fully with the investigation by the FCA and are pleased to put this matter behind us.”
