The U.K. Financial Conduct Authority (FCA) on Wednesday announced a fine of 7.9 million pounds (U.S. $9.7 million) against a unit of insurance broker Jardine Lloyd Thompson Group (JLT) for failing to control financial crime within its South and Central American subsidiaries.
JLT Specialty Limited (JLTSL), a U.K.-based provider of risk management and insurance claims services, received a 30 percent reduction from a penalty of £11.3 million (U.S. $13.9 million) for self-reporting the alleged misconduct in 2017, according to an FCA press release.
Between November 2013 and June 2017, JLTSL paid $12.3 million in commission to JLT Colombia Wholesale Limited, the parent company of JLT Re Colombia, which in turn paid $10.8 million to a third party based in Panama, according to the FCA. The third party then paid $3 million to government officials at a state-owned insurer to help retain and secure the business of JLT’s subsidiaries, the FCA continued.
The regulatory action follows the U.S. Department of Justice (DOJ) declining to prosecute JLT in March despite alleged evidence of nearly $3.2 million the company paid in bribes to Ecuadorian government officials.
The FCA’s final notice acknowledged JLT’s agreeing to disgorge to the DOJ more than $29 million in “corruptly obtained” profits, which it said included financial benefits arising from JLTSL’s alleged breaches of U.K. law.
Compliance considerations: The FCA’s notice included a list of how JLTSL’s third-party risk assessments failed by not:
- Ensuring information, including potential red flags, held by JLTSL employees who were either involved in negotiating the relationship with the third party or placing the business in the London market was brought to the attention of the company’s know your customer subcommittee or its financial crime team;
- Ensuring the other JLT entity disclosed all material information about the third party to the financial crime team for review, consideration, and action as necessary; and
- Considering whether additional monitoring and oversight of third parties, in accordance with JLTSL’s process, was appropriate.
JLT response: JLT was acquired by Marsh & McLennan Companies in 2019. In a reissued statement first released following the DOJ’s decision in March, a Marsh & McLennan spokeswoman said the matter “relates to a former employee of JLT who pled guilty to charges arising from actions that took place in Ecuador from 2014-2016, prior to the acquisition of JLT in 2019.”
“As previously disclosed, we have cooperated fully with the investigation by the FCA and are pleased to put this matter behind us,” the spokeswoman said.