Anti-Bribery Laws: Policing Corruption Worldwide

At its core, bribery is the act of offering, giving, receiving, or soliciting anything of value to influence actions unlawfully. A typical example might be a company offering a financial incentive to secure a contract unfairly. Such practices distort competition, harm governance, and create reputational risks for organisations. 

Anti-bribery measures aim to prohibit such unethical practices and enhance transparency, integrity, and trust within businesses. Governments and international organisations worldwide have implemented various frameworks and laws to address corruption and ensure fair markets. For organisations, failing to comply with these regulations may result in hefty fines, imprisonment, and long-term reputational damage. 

Implementing anti-bribery compliance is vital across industries, not just for regulatory purposes but also as part of ethical governance. For example, a financial institution engaging in robust anti-bribery due diligence before onboarding a supplier could avoid inadvertently enabling corrupt practices within its value chain.

Regarded as one of the strictest bribery-related laws globally, the UK Bribery Act 2010 criminalises not only bribery but also the failure of organisations to prevent bribery. Unlike earlier legislation, this law covers actions taking place outside the UK, provided the organisation has UK connections. Violators face unlimited financial penalties or imprisonment of up to 10 years.

Comprehensive due diligence and enhanced due diligence (EDD) solutions from LSEG Risk Intelligence can assist companies in identifying high-risk third-party entities—essential for compliance with the UK Bribery Act.

A landmark US law, the FCPA regulates the bribery of foreign officials by organisations to retain business. Divided into two main sections—anti-bribery provisions and accounting transparency requirements—it provides guidelines to ensure ethical practices in global transactions.

The anti-bribery provisions cover situations such as offering money or assets to influence decisions favourably. While a US law, the global reach of FCPA ensures companies worldwide must comply if they trade in US markets.

An international agreement supported by over 40 nations, the OECD Anti-Bribery Convention requires member states to criminalise bribery of foreign officials in international business. This international collective effort underscores the serious implications of bribery on economic development and trade.

Effective anti-bribery measures form a key component of broader commitments to financial crime compliance and anti-money laundering (AML). Organisations employ these measures to mitigate the complex challenges associated with global markets.

1. Relationship to Due Diligence: Anti-bribery measures work alongside due diligence processes to screen third parties like vendors, suppliers, or distributors. Enhanced due diligence (EDD) may be required for high-risk partnerships, ensuring robust preparation against bribery risks.
2. Policies and Accountability: Anti-bribery remains a critical pillar in corporate regulatory compliance frameworks. Maintaining transparency through stringent financial reporting, whistleblowing policies, and improved governance can strengthen organisational integrity.
   

To counter corruption risks effectively, companies must develop a comprehensive anti-bribery and corruption policy. Key elements include:

• Clear Prohibited Activities: Define unacceptable behaviour linked to bribery or corruption.
• Employee Training: Educate employees about risks, laws, and the organisation’s policies. For example, an annual session explaining the UK Bribery Act 2010 can create awareness among employees.
• Whistleblower Mechanism: Encourage employees to report unethical practices without fear.
• Monitoring Systems: Increase alignment with anti-bribery laws, detecting irregularities in transactions.
  

Conducting a risk assessment is essential to understanding the vulnerabilities a company might face regarding bribery. Businesses should evaluate the following:

• Operations in high-risk jurisdictions prone to corruption.
• Sectors or industries with a history of bribery (e.g., construction, mineral extraction).

Illustrative Example:

In the financial sector, compliance teams can use transaction monitoring tools to pinpoint unusual financial patterns indicative of bribery attempts. By identifying “red flags,” such as unusually high consultancy fees, companies can inspect and take preventative action.

A well-structured due diligence programme can mitigate bribery risks arising from third parties and collaborations. Here's how companies can adopt meaningful practices:

Supplier Vetting: Ensure potential suppliers have no history of unethical practices.

Deep Screening for High-Risk Entities: Enhanced due diligence involves verifying not just ownership but also funding sources and political connections to detect heightened corruption risks.

Consequences for violating anti-bribery laws vary but often involve:

• Severe Fines: Companies may face multimillion-dollar fines for contraventions, as seen in past FCPA cases.
• Reputational Damage: Damage to credibility can lead to loss of partnerships or customers.
• Legal Repercussions: Sanctions, asset forfeitures, and even prison sentences for executives.