Financial Conduct Authority Fines JLT Specialty £7.8 million

The Financial Conduct Authority (FCA) has levied a fine of £7,881,700 against insurance broker JLT Specialty Ltd. for financial crime control failings, which in one instance CFA said allowed bribery of more than $3million to take place.

JLT Specialty, which is based in the UK, was part of JLT Group plc, which had a number of subsidiaries around the world. In 2019, JLT Group plc was acquired by Marsh & McLennan Companies, Inc.

The FCA found that JLT Specialty “failed to manage its business and risks responsibly and effectively” during the period from 21 November 2013 and 6 June 2017.

JLT Specialty placed business in the London reinsurance market for JLT Re Colombia, another company in the JLT group. The business had been introduced by a third-party based in Panama. Between November 2013 and June 2017, JLT Specialty 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 the third-party introducer. This introducer then paid over $3 million to government officials at a state-owned insurer in order to help retain and secure their business for JLT Specialty and JLT Re Colombia.

“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,” commented Mark Steward, CFA’s executive director of enforcement and market oversight.

The FCA said it considered that JLT Specialty’s self-report in June 2017, assistance during the investigation, and its agreement to settle at an early stage of the investigation qualified it for a 30% reduction on the original penalty of £11,259,500.

The FCA said it previously fined JLT Specialty £1,876,000 in December 2013 for similar risk control failures around overseas Introducers and bribery and corruption.