Wolfsberg Group’s updated guidance on Anti-Bribery and Corruption Compliance Programmes

The Wolfsberg Group published its new guidance on Anti-Bribery and Corruption (ABC) Compliance Programmes on 17 April (the Guidance), which replaces its 2017 guidance. It is aimed at supporting the financial services industry with the development, implementation and maintenance of effective compliance programmes.

The Guidance identifies the main areas of risk that need to be covered in ABC compliance programmes and reminds the industry that such programmes need to be:

• overseen by senior management; and
• administered by employees with sufficient authority, expertise and resources, who have access to the Board or governing authority.

More specifically, financial institutions (FIs) need to communicate their compliance programme through policies and guidance along with risk-based training for relevant employees. This should be driven by senior management and accessible to all employees.

Risk assessment

The Guidance covers key areas firms should focus on in their risk assessments, which should cover both inherent risks and residual risks after evaluating corresponding controls.

An important aspect emphasised by the Guidance is the need to regularly consider emerging bribery and corruption risks as part of the assessment. These are new risks which can be difficult to fully assess at first but which have a high potential to manifest and cause significant concerns such as financial loss, reputational harm or legal action. The Guidance stresses the need for increased management review of these risks as it may be difficult to put adequate controls in place whilst the risk is emerging.

Implementing ABC controls

The Wolfsberg Group provides some guidance on common bribery and corruption risks associated with:

• giving or receiving anything of value, including gifts and hospitality; donations, sponsorships and employment;
• engagement of third-party providers, including intermediaries;
• customer related transaction risks; and
• principal investment and controlled fund acquisitions or joint ventures.

The Guidance stresses that FIs should consider that the risk of bribery and corruption is not limited to cash payments and should be considered in relation to "anything of value", which can include anything from offering unpaid work experience in exchange for obtaining or retaining business to charitable donations.

The Guidance provides factors FIs should consider when undertaking due diligence in relation to acquisitions or significant investments in companies, entities or joint ventures (Targets), as well as contractual protections they might consider putting in place, including:

• representations and warranties in relation to compliance with ABC laws;
• a contractual right to require enhanced ABC policies in the Target; and
• a contractual right to withdraw from the transaction upon violation of ABC laws.

The Guidance also highlights the need for FIs to ensure, through post-acquisition due diligence, that a Target has adequate ABC controls in place and should seek to enhance and implement ABC policies if they are not already present.

Monitoring and evaluation 

Finally, the Guidance highlights the importance of FIs monitoring their controls implementation to detect instances of non-compliance with their own policies. It highlights that FIs should identify qualifying material adverse events and share lessons learned from these. This ensures an FI’s programme can continue to improve and evolve relative to internal demands and risks faced by the business.