http://www.comsuregroup.com/news_rss.asp Allinta CMS V2.4 - www.allinta.com http://www.comsuregroup.com/news.asp?newsID=1864 http://www.comsuregroup.com/news.asp#n1 Jersey Financial Services Commission - Public Statement - The Jersey Financial Services Commission (the "Commission") issues this public statement pursuant to Article 25 of the FS(J)L.1. Introduction - 1.1. TSL* is presently authorised by the Commission to conduct Trust Company Business as defined in the FS(J)L. Following concerns over compliance by TSL, through the conduct of the Principals, with applicable laws and the Codes of Practice for Trust Company Business (the "Codes"), the Commission commenced an investigation into TSL and the Principals (the "Investigation"). The Investigation focussed, albeit not solely, on business introduced to TSL by intermediaries based in the Far East.1.2. The Principals and TSL have co-operated with the Commission throughout the course of the Investigation.2. Summary of Findings2.1. Corporate governance exercised by the Principals, with particular reference to the trust company business services that were provided to those entities that were subject to the Commission's Investigation, was seriously deficient: there was no effective span of control. The lack of effective corporate governance was a significant factor, resulting in a number of key failings, including, but not limited to, breaches of the FS(J)L and the Codes, as outlined below:2.2. Key failings:2.2.1. There was a failure to maintain appropriate accounting records for certain structures under administration.2.2.2. Excessive reliance was placed on intermediaries providing instructions on behalf of TSL's customers. On numerous occasions, TSL acted on such instructions without undertaking any assessment of the rationale or purpose behind the instruction.2.2.3. Serious conflicts of interest arose and were not managed appropriately or at all. Such conflicts were not documented or acknowledged to exist.2.2.4. Transactions were executed without reference to the constitutive documents governing certain customer structures.2.2.5. There was a lack of transparency in respect of fees charged by TSL on behalf of itself and certain intermediaries.2.2.6. TSL's Compliance and Anti-Money Laundering functions for the period 31 December 2005 - 25 November 2009 were ineffective.2.2.7. On certain occasions, TSL failed to maintain proper systems and controls sufficient to demonstrate compliance with the requirement to keep adequate financial resources.3. Breaches of the FS(J)L3.1. Certain non-regulated entities in the TSL group were providing trust company business services to TSL's customers without having the appropriate registration under the FS(J)L which constituted unauthorised financial service business pursuant to Article 7 of the FS(J)L.4. Breaches of the Codes4.1. The Codes were first issued by the Commission on 27 November 2000 and have been subject to revision. The Codes establish 7 core principles for the conduct of Trust Company Business. Those identified by the Commission as having been breached in this case were as follows:-4.1.1. Principle 1: A registered person must conduct its business with integrity.4.1.2. Principle 2: A registered person must have the highest regard for the interests of its customers. 4.1.3. Principle 3: A registered person must organise and control its affairs effectively for the proper performance of its business activities and be able to demonstrate the existence of adequate risk management systems.4.1.4. Principle 4: A registered person must be transparent in its business arrangements.4.1.5. Principle 5: A registered person must maintain, and be able to demonstrate, the existence of adequate financial resources and adequate insurance.5. The Principals**5.1. The Investigation has concluded the Principals failed to act with fitness and propriety in the management and control of TSL. Each of the Principals have been issued with directions under Article 23(1) of the FS(J)L (and the equivalent provisions of the other regulatory laws ), which prevents them from performing any function, engaging in any employment or holding any position in the business of a registered person without first obtaining the prior consent of the Commission. The Principals are further prohibited from performing any function or service which falls within the definition of financial service business under Article 2 of the FS(J)L.6. Cessation of Business6.1. TSL is not fit and proper to be registered for the conduct of Trust Company Business under the FS(J)L and has submitted a cessation of business plan to the Commission which will result in the orderly wind-up of the business, after which TSL's authorisation to conduct Trust Company Business under the FS(J)L will be revoked.7. Trustcorp (Jersey) Limited7.1. The Investigation did not concern affiliated entities Trustcorp (Jersey) Limited, Roanne Trust Company (Jersey) Limited, Roanne Secretaries Limited, Roanne Securities Limited, Roanne (Nominees) Limited or Roanne Limited, all of which continue to be authorised by the Commission.7.2. As at the date of this public statement, the Commission considers there to be no reason to require it to investigate Trustcorp (Jersey) Limited and its subsidiary companies, its business comprising a separate book of customers.8. Conclusion8.1. The Commission regards effective corporate governance as key for a regulated entity to be able to demonstrate compliance with applicable legislation and Codes of Practice.* TSL = Trustcorp Services Limited and affiliated members, namely: Trustcorp Secretaries Limited; Trustcorp Nominees Limited; Trustcorp Limited; Catot Limited; T&B Limited; TCP 1 Limited; TCD2 Limited; (together, "TSL")** the "Principals"  Michael [ulian Kenney-Herbert;David William Roberts; David Henry Christopher Hill William Thomas Davies; and William Henry Kenneth Simpson. (together, the "Principals")*** Financial Services (jersey) Law 1998, as amended (the "FS(J)L")31 January 2012 - http://www.jerseyfsc.org/pdf/Public_Statement_Trustcorp_Services_Limited_January_2012.pdfContact: Barry Faudemer, Director, Enforcement Division Telephone: 01534 822137, or Email: b.faudemer@jerseyfgc.org Tue, 31 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1863 http://www.comsuregroup.com/news.asp#n2 SFO publishes guidance for boardrooms on serious economic crime - The Serious Fraud Office (SFO), in collaboration with other key anti-corruption and economic crime organisations, has published a boardroom guide on prevention and compliance of serious economic crime. The primary purpose of the publication is to provide board members in the UK with informed commentary on the impact of anti-fraud and anti-corruption legislation, particularly since the landscape for best practice compliance and fraud prevention has become increasingly complex. The guide focuses on a number of offences in the UK, including Bribery Act 2010 offences, money laundering, fraud and corporate manslaughter, together with guidance on dealing with investigations by regulators and prosecutors. A copy of the guide is available. http://www.seriouseconomiccrime.com/ebooks/Serious-Economic-Crime.pdf Fri, 27 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1855 http://www.comsuregroup.com/news.asp#n3 “Statement in response to comments by Ed Miliband regarding action against the Crown Dependencies" Monday 16th January 2012 - Sirs,We have noted with disappointment the comments made by the leader of the opposition, Ed Miliband over the weekend, in which he urges action by the EU against British Crown Dependencies, including Jersey.It is disappointing when political leaders choose to make inaccurate accusations about Jersey which do not reflect the positive contribution that Jersey and the other Crown Dependencies make to the broader UK economy. Once again the confusion between the terms "tax avoidance" and "tax evasion" creates a false impression of Jersey's co-operative, well-regulated offshore financial centre.Tax evasion is illegal in Jersey and it is a criminal offence - not a civil one -to facilitate or engage in tax evasion. The majority of Jersey's activities are focussed on the pooling of and structuring of international funds that have already been taxed.The last Labour Government commissioned the Foot Review in December 2008. The report highlighted the value that Jersey provided to the UK during the banking crisis in the form of hundreds of billions of pounds of liquidity. That contribution continues to this day.Furthermore, the report concluded that the amount of tax avoided by UK corporates using British Crown Dependencies and Overseas Territories was "significantly lower than estimates produced by previous studies have suggested." Therefore, the Foot report and most recent analysis from the HMRC (September, 2011), both suggest that tax avoidance is considerably lower than the wildly inflated figures produced by self-appointed lobby groups such as the Tax Justice Network.The characterisation of Jersey as a "tax haven" fails to recognise the regular endorsements that the island has received from the OECD and IMF. Moreover the accusation made today that Jersey is not co-operative with the HMRC is quite simply wrong: Jersey has signed both a Tax Information Exchange Agreement (TIEA) and a Double Taxation Agreement (DTA) with the United Kingdom. Jersey has very clear, open and transparent lines of communication with HMRC and is fully co-operative on tax matters. We also work alongside the UK in fighting financial crime and tax evasion.Ian Gorst, the Chief Minister of Jersey has today extended an invitation to Mr Miliband to visit the island to learn first hand how Jersey actually operates as a stable, reliable and responsible international financial centre.”http://www.jerseyfinance.je/news/statement-in-response-to-comments-by-ed-miliband-regarding-action-against-the-crown-dependencies/ Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1862 http://www.comsuregroup.com/news.asp#n4 The FSA's perspective on insurance fraud - Speech by Philip Robinson, Financial Crime & Intelligence Division Director - Post Magazine Fraud Management Briefing - 26 September 2007 - .......why financial crime issues should be taken seriously by the insurance sector and buttress this point by highlighting where we think the main risks lie. And I'll tell you more precisely how the FSA expects insurance firms to respond to the threats and tackle financial crime. In closing I will mention some of the challenges a proper implementation of anti-financial crime systems and controls poses to the insurance sector. I. Financial Crime: why is financial crime an important issue for the insurance sector and where are the main risks?The FSA's financial crime objective (contained in the Financial Services and Markets Act that gives us our statutory powers) is one of 4 statutory objectives we have been given. It complements our 3 other objectives, namely maintaining market confidence, consumer protection, and public awareness. Our financial crime objective has a very broad scope, as it encompasses not only fraud and money-laundering (which includes terrorist finance) but also market misconduct and other crimes such as corruption and sanctions.Our financial crime objective consists of "reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime".Let me first start by clarifying why we, at the FSA, think it is crucial for the insurance sector to remain vigilant with regards to financial crime risks affecting your industry. Many might take the view that since the general insurance sector is not covered by the Money Laundering Regulations, this area only constitutes a low risk sector. Well, we think differently.The Proceeds of Crime Act 2005 does affect the insurance sector, as any other financial institution: firms do have a duty to report their suspicion of money-laundering through a suspicious activity report (SAR) to SOCA. And let me reinforce this point. Because specific regulations aren't in place to cover general insurance does NOT mean that the threats are not real. They might not be as visible, but they surely exist. So the first message I want to leave with you today is that it is not the time to be complacent. Complacency only carries the risk of the insurance sector becoming a soft target for criminals seeking to launder legitimate or illegitimate crime proceeds. And in fact this view is not just ours. The Financial Action Task Force (FATF) report on Money-Laundering and Terrorist Financing Typologies published in 2005 goes into some detail on the vulnerability of the insurance sector to money laundering. One of the main concerns of this report is that whilst the insurance market offers "increasingly sophisticated products to their customer, competing with other parts of the financial services industry", this "expansion and increasing sophistication has not been accompanied by a corresponding widespread awareness that insurance products at the same time have become increasingly more attractive to criminals". And the UK Threat Assessment (UKTA) made by the Serious Organised Crime Agency (SOCA) reveals that retail banks and building societies, life assurance as well as general insurance are the sector of the UK financial services industry that SOCA identifies as susceptible to money laundering – reports such as the SOCA UKTA produce extremely valuable information and are aimed to inform you of trends and threats that might affect your sector, so I would strongly encourage you to read such reports!Perhaps my role here is not to list all the cases in which fraudulent activities may happen within the insurance sector. But what I would like to do is to point at emerging or persistent financial crime risks that we think the insurance industry should be alerted to.I would say that the main risks lie with a firm systems, staff and processes as well as customers. For example when one considers firms' systems, an increasing risk is poor information security: poor information security standards will make insurance firms more vulnerable to data compromise incidents, due to the extent of information that insurance firms usually hold on consumers, for instance, sensitive data contained in claims forms for instance. The use of intermediaries may also increase the risk of a firm being used for a purpose connected with financial crime, since intermediaries on which the firm relies may be less diligent or have less efficient systems to detect criminal threats than the firm processing their business.Let me now turn to consumer-driven fraud. This may be perpetrated opportunistically by a large number of consumers, without any visible repercussions for the vast majority of fraudsters involved. Our new financial crime outcome for the FSA is that consumers are better equipped to protect themselves from financial crime. They should also not commit financial crime themselves. I will come back to these risks and how to combat them later in my presentation.Finally, on the fraud side, we see organised fraud involving insurance claims as a key emerging risk. Using the UK Threat Assessment informed by the Industries own work outlines how criminals organise staged accidents, deliberately causing collisions between innocent victims (or their accomplices playing the victim's role) and then submit fraudulent insurance claims. Life assurance takeover fraud, whereby criminals gain access to the victim's account details and security information to redeem the policy, is also on the increase. Not only is this coning the industry of £400 million per year, which represents the sum earned through insurance fraud by organised criminal groups according to the ABI, this type of crime is as it puts life and health of innocent people at risk, and perhaps generates revenue for other criminal activities including terrorism and other serious crimes. So this is a new angle on our consumer protection objective: consumer protection is a key focus of the FSA and of our new financial crime strategy. Financial crime risks cannot only be measured only in terms of financial losses: staged accidents reveal how financial crime is concerned with public safety, the notion of public harm, and the protection of society at large. So what about money-laundering risks, will you ask me?To assist with improving awareness of the vulnerability of the insurance sector, the FATF has identified nine common ways in which the insurance sector may be used to launder money. The most frequent way identified by the FATF through which money can be laundered is 'International transactions'. Complex transfers of money through bank accounts or cheques in different jurisdictions can complicate the control/identification of the source of funds by the insurer. The FSA is increasing its focus on international and cross-border activities: financial crime risks are heightened when firms expand into emerging markets where counterparties are not subject to equivalent anti-financial crime regulation. And let me give you a brief example of how money can be laundered through international transactions (taken from the FATF report I've just mentioned):A number of insurance companies, domiciled in the Isle of Man and the Bailiwick of Guernsey, were identified through information received in a narcotics smuggling investigation as having numerous policies that were paid for with drug proceeds. Narcotics proceeds were deposited into life insurance policies over a substantial period of time before 2001. These policies were primarily established by one 'master broker' who operated in Colombia and other South American jurisdictions. The policies that were identified as containing drug proceeds were funded in several ways. First, and most common, was via third-party wire transfers – they often originated from money brokers or casas de cambio. Once credited to the institution's account, the broker provided detailed information of how to apportion the wired amount and which accounts to credit the funds to. The insurer also received payments via third-party cheques and structured money orders (to avoid reporting thresholds). Finally, some policies were paid with funds from the commission accounts of the brokers. In this scenario, the brokers accepted cash from the client in Colombia and credited the client's policy with funds from his business operating account or as a part of his commission cheque.The second possible way to launder money is through 'General insurance claim fraud involving goods purchased with illicit funds'. In this case, money is laundered by using illicit funds to purchase high-value goods and then lodging an insurance claim for loss or damage to those goods.The seven other possible channels for money-laundering in insurance mentioned in the FATF report are 'early policy redemption', 'Collusion', 'Third-party payment of premiums', 'Life insurance single premium policies', 'Cash payments to purchase insurance', 'Fraud', and finally 'Abuse of cooling-off periods'.Perhaps it would be worth adding to this list the 'overpayments of premiums' and 'high brokerage', as highlighted by the IAIS as particularly attractive methods to launder funds. As a matter of fact, 'high brokerage' may be used to pay off third parties that are not related to the insurance policy, and this is often being made via strange premium routes.The FATF has produced indicators that should raise suspicions of insurers, brokers or insurance intermediaries. Here are only a few of these indicators - I would encourage you to read the full list!•High premium payments compared to verifiable legitimate income.•Lack of concern by the policyholder over charges or costs for early redemption.•Repeated and unexplained change of beneficiary.•Unusually high commissions paid to broker/intermediary. So I hope you can see with these indicators that fraud and money laundering are often strongly intertwined. For instance the criminal purchase of an insurance or reinsurance company may allow criminals to invest their proceeds behind the cover of an apparently legal company.Another key outcome that we are satisfied that persons of questionable integrity do not manage, own or control firms active in the UK financial sector. But it is also our aim that that UK firms do not change their standard of integrity whilst doing business abroad. We take this issue very seriously: a 'two-standard' approach is not acceptable, and firms cannot change the way they do business, for instance through the use of illegal or inappropriate incentives because they think they can apply different standards whilst transacting abroad. So the insurance sector needs to be aware of the importance of making the UK a clean place to do business. How? Well here is a brief picture of what the FSA expects from the firms we regulate. II. What the FSA expects insurance firms to do?The FSA regulates over 29,000 firms. We require firms we regulate to have effective systems and controls in place, adequately designed and effectively implemented, to address their financial crime risks in a proportionate way and prevent financial crime from occurring. For instance, in response to this increasing risk of information security, firms need to ensure that customer personal data is stored safely to reduce the risk of financial crime being perpetrated against them, other firms and their customers.As many of you will be aware, the FSA is moving increasingly to a principles-based approach to regulation. We do not, therefore, advocate a 'one-size fits all' approach, which would be overly burdensome for most firms. The risk-based approach will only succeed if the use of judgment by senior management prevails over a box-ticking approach. In other words, we're interested in how you think managing risks in your firm makes the most sense in relation to your products' vulnerabilities or your firm's specific channels of business for instance. What we seek to assess when we visit a firm is whether a firm has a strong anti-fraud culture, with a clear and consistent lead being given from senior management and a clear allocation of responsibility for the day to day management of risk. We look at the staff training arrangements, and at how information on financial crime risks is captured and presented to senior management and to the board. One of the FSA divisions carried out in 2006 some thematic work on claimant fraud in both the life and non-life sectors. Some of the weaknesses this work identified included a lack of management information as well as over-reliance on front line staff to report fraudulent activity. So what does this thematic work tells you?Well that a 'clear allocation of responsibility' is crucial to fight financial crime risks. And senior management must play an active role in establishing the right cultural ethics and policies within their firm, and take financial crime issues seriously – but not just when a financial crime incident is discovered!Senior management need to ensure that they receive timely, regular and appropriate management information to enable them to monitor the firm’s performance on fighting crime. Management Information should be qualitative, as well as quantitative. Firms need to determine proportionate key risk and key control indicators that are appropriate to their business.Product proofing, adequate customer due diligence (CDD) as well as 'Know Your Intermediary' procedures are absolutely key for the insurance sector. Intermediaries cannot consistently meet their financial crime responsibilities if it is unclear whether they act for the customer or the firm. Insurers and brokers need to be clear on where they have responsibility – e.g., which party has responsibility for performing customer due diligence. Obviously, I am not trying to say that this is an easy route, since it is often difficult to identify who the customer of the insurance contract really is. And KYC on third parties receiving payments would be no easy task, but perhaps the ability to perform this type of 'reverse' CDD could greatly improve the transparency of the payments system.Complex distribution channels (eg. sub-delegation) and multi-national transactions require a particularly robust anti-financial crime control environment and adequate audit arrangements. Firms also have a duty to report significant frauds to us. And we look into these reported frauds carefully, since individual incidents may be indicative of more general and pervasive trends. Being aware of specific fraudulent patterns, we can then disseminate information to the relevant sector about these risks. In March of this year, we launched a streamlined system for reporting financial crime in the insurance industry. Under the new system, insurance firms and intermediaries are being called on to tell us when they suspect criminal behaviour may be taking place. This may arise, for instance, when an insurer terminates an agency agreement with an intermediary where they see doubtful practice or suspect misconduct. Examples of possible financial crime involving insurance fraud include:•misappropriation of client money or money held under risk transfer agreements;•falsifying customer details to obtain insurance business that would otherwise be turned down or be more expensive; andFirm behaviours of this kind have led us to take action against a number of insurance intermediaries. As this is a voluntary initiative, so we REALLY need the insurance industry to work with us to turn this project into a useful and successful initiative in the fight against financial crime. We have long recognised that the most effective way to tackle fraud is by working in partnership with our stakeholders, who encompass organisations and bodies including government, law enforcement, consumers and very importantly firms themselves. We want to foster an environment where information sharing is not only encouraged, but actively seen by all as a means both to reduce crime and to increase profitability. And this remark leads me to address some of the challenges we see in tackling financial crime in the insurance sector.III. The Challenges to tackling financial crime in the insurance sectorThe International Association of Insurance Supervisors (IAIS) published a Report on the Survey on Preventing, Detecting and Remedying Fraud in Insurance in May 2007; this report identified some problems in the battle against fraud, and I'd like to reflect on them. One of the main problems identified in this report is an 'inadequate fraud risk management'. I have mentioned below what the FSA expects firms to do in this regard, so I'll turn to the other issues, in no particular order, that were identified in the IAIS Survey. 'Public attitude' was highlighted as a major issue by the report. We cannot let the public think that 'it is ok' to commit fraud, because they take the view that their opportunistic fraud will not harm anyone. We need to get across the joint message that fraud is not a victimless crime, that inflating an insurance claim is just as unacceptable as any other dishonest behaviour, and that the cost of fraud is borne by us all, whether as customers paying higher prices, or investors receiving lower returns.Research conducted by the ABI has found that false claims cost the insurance industry over £1.5 billion a year. This adds around 5% to the premiums paid by honest customers. Moreover, the ABI response to the Fraud Review published in April 2006 states that one of the most worrying aspects of insurance fraud is the extent to which it is socially acceptable. So awareness and education of customers are key, to change mentalities. An earlier survey revealed that37% of respondents admitted they would not rule out inventing a claim, and 47% would not rule out exaggerating a claim. These numbers indicate that the actual incidence of fraud may be higher than admitted by respondents.'Ineffective regulation and law enforcement' was also cited as a main obstacle to deal with fraud in insurance. Well it is not because no sufficient priority is given to insurance fraud that we should not endeavour to combat it. The fact that it is difficult to prove fraud is not an acceptable outlet to give up the fight. In the UK the Fraud Review Team at the Attorney Generals office needs the Industry's support if it is to succeed in successfully implementing the findings of the Fraud Review which will address this shortfall in the UK.Indeed, ineffective detection and prosecution of fraud often goes hand in hand with the 4th problem mentioned in this report, namely 'commercial interest'. As the report explains, "this category represents the issue that the cost-benefit analysis of anti-fraud measures is not always, at least not in the short term, in favour of fraud prevention and detection". In fact, fraud detection can appear to be quite expensive compared to hiding the direct costs of fraud. We need to overcome this commercial inertia, not least because of the reputational damage of having poor fraud prevention highlighted by an FSA enforcement action.The 5th problem highlighted by the IAIS report was the 'opportunities for fraudsters'. This points to the fact that some complex characteristics of insurance products coupled with the increasing possibilities of information technology, makes it extremely difficult to detect and to prove that fraud has occurred. Obviously this description would apply to money-laundering as well. And let me illustrate briefly this point. On 13th September, the Insurance Times published an article on internet fraud, warning us that "The internet is becoming a haven for insurance fraud. A survey had found that 75% of motor policy frauds were committed online and 96% of frauds involving contrived claims were cases where the policy was taken out online. The explanation given was that it is difficult to lie directly to a broker, while the internet allows the shield of anonymity". 'Information sharing and cooperation' closes the list of 'problems' highlighted in the IAIS report. As I have mentioned earlier, we at the FSA think a partnership approach is likely to reap a lot more benefits for all the stakeholders involved in the fight against financial crime than working in silo. So we have been really pleased by industry initiatives to collaborate to fight serious fraud, putting in place advanced data sharing processes. That is why we strongly supported the insurance industry's initiative to set up the Insurance Fraud Bureau in July 2006, and I don't need to repeat the merits we see in such initiative, since you've heard this morning John Beadle's presentation. And much more can be done, it seems, to reinforce the cooperation between insurers themselves, as well as between insurers on one side and law enforcement and regulators on the other, to increase our impact against financial crime in the insurance sector.But many of you may also ask how can you tally your fraud strategy with other FSA obligations, for instance the Treating Customers Fairly (TCF) initiative? What I would reply is simple: a firm’s culture needs to support both the reduction of financial crime and treating customers fairly. Indeed, both need to be integral to the design of firms’ systems and controls; and any tensions between these, real or perceived, need to be managed, as firms have a duty to ensure their desire to offer a good customer service and treat their customers fairly does not impede the fight against financial crime. But what about the risk of penalising honest customers, you will reply? Senior management need to ensure they have appropriate systems and controls for investigating claims for possible frauds which are proportionate to the level of risk.Using anti-fraud techniques or forensic analysis can be expensive, which may account for the fact that low level fraud may encounter limited resistance from insurers. We strongly hope that the National Fraud Reporting Centre will reverse this trend.Finally, it is true that innocent non-disclosure/misrepresentation can occur and firms need to bear this in mind in setting their claims procedures. Developing a sophisticated and risk-sensitive set of indicators for claimant fraud will enable firms to manage claims in a way that addresses the risk of fraud in a proportionate and manner, whilst ensuring fair treatment of their customers.I hope I had some success this afternoon in raising awareness of the financial crime risks we have identified in the insurance industry – and the better we understand such risks, the better we will be able to mitigate them. The time is ripe to increase our effectiveness by working more closely in partnership raising our game not only on the fraud side, but also in the area of money-laundering. By working together to combat financial crime the UK insurance industry will gain further strength and credibility, and remain a leading and attractive centre for global business.read morehttp://www.fsa.gov.uk/pages/Library/Communication/Speeches/2007/0926_pr.shtml . Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1861 http://www.comsuregroup.com/news.asp#n5 Proposed definition of "charitable purpose" under the draft Charitable Purposes (Jersey) Law 20- -- The draft Charitable Purposes (Jersey) Law 20- (the "Draft") is intended to define the term "charitable purpose" for general purposes in Jersey law.    The current position under Jersey lawThe law of Jersey relating to the definition of charitable purposes largely follows English case law and can be traced back to the ancient Statute of Elizabeth, which although now repealed in England, provided the basis for Meaker v Picot (1972), the case upon which the law in Jersey on 'charitable purposes' is currently based. In the Statute of Elizabeth there were 4 divisions of charity. To be charitable, a purpose must be (a) enforceable by the court; and (b) fall within any of the four divisions of charity derived from the Statute. The four divisions of charity are:  trusts for the relief of poverty;trusts for the advancement of education;trusts for the advancement of religion;trusts for other purposes beneficial to the community not falling under any of the three other divisions.  To be of benefit to the community, the purpose must benefit the community or an appreciably important segment of the community, which must be sufficiently defined and identifiable by some quality of a public nature, but may be restricted within narrow limits; and may be a community abroad; but must not be numerically negligible or dependent upon a personal relationship with a particular individual or individuals nor merely private individuals pointed out by the donor.Therefore, not every object which is beneficial to the community is charitable, but only those which are beneficial in a way in which the law regards as charitable, in that it is consistent with the spirit and intendment of the preamble to the Statute of Elizabeth.In addition, for a gift to be considered to be for charitable purposes, the purposes must be exclusively charitable.What constitutes a 'charitable purpose' under the Draft?The Draft is based on section 7 of the Charities and Trustee Investment (Scotland) Act 2005.  To be regarded as charitable a purpose must, firstly, be one of those listed in Article 3(2) of the law and, secondly, must provide public benefit either in Jersey or elsewhere.The Draft does not define what is meant by 'public benefit'. However, Scottish law requires that:i.there must be identifiable benefit to the public, or to a section of the public;ii.the beneficiaries must be appropriate to the purpose;iii.the opportunity to benefit must not be unreasonably restricted; andiv.people in poverty must not be excluded from the opportunity and any private benefits must be incidental.The list under Article 3(2) includes the divisions of relief of poverty, advancement of religion and advancement of education found under the Statute of Elizabeth, along with the following additional purposes:  the advancement of health (which includes the prevention or relief of sickness, disease or human suffering)the saving of lives;the advancement of citizenship or community development (which includes rural or urban regeneration and the promotion of civic responsibility, volunteering , the voluntary sector or the effectiveness or efficiency of charities);the advancement of the arts, heritage, culture or science;the advancement of public participation in sport;the provision of recreational facilities, or the organisation of recreational facilities with the object of improving conditions of life for persons for whom the facilities or activities are primarily intended for;the advancement of human rights, conflict resolution or reconciliation;the promotion of religious or racial harmony;the promotion of equality and diversity;the advancement of environmental protection or improvementthe relief of those in need by reason of age, ill-health, disability, financial hardship or other disadvantage (including relief given by the provision of accommodation or care);the advancement of animal welfare; andany other purpose that may reasonably be regarded as analogous to any of the preceding purposes (with the advancement of philosophical belief, whether or not involving belief in a god, being analogous to the advancement of religion).  The Draft specifically provides that the advancement of a political party is not a charitable purpose and also that if a body has a purpose which falls within the Article 3(2) list but its constitution allows it to apply any of its property for a purpose which is not also listed in Article 3(2) then its first purpose will not be treated as charitable either.The Draft provides that a reference in any enactment or rule of law to a charitable purpose is to be taken as a reference to such a purpose within the meaning of the Draft, unless in the case of any other enactment a contrary intention appears and applies despite any rule of customary law.CommentThe Draft has been submitted to the Attorney General as partie publique for his consideration. Furthermore, there will no doubt be additional consultation with interested parties and accordingly we envisage there being some further delay before the Draft is debated in the States.http://www.ogier.com/publication%20library/Proposed_definition_of_charitable_purpose_under_the_draft_Charitable_Purposes_Jersey_Law_20-.pdf#page=1published by Ogier author Josephine Howe Jersey December 29 2011  .   Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1860 http://www.comsuregroup.com/news.asp#n6 Corporate governance code for collective investment schemes and management companies - On 14 December 2011, the Irish Funds Industry Association (IFIA) published a voluntary corporate governance code (the “Code”) that is to apply to Irish authorised collective investment schemes (CIS) and Irish authorised management companies (ManCos). An accompanying questions and answers paper (FAQs) has also been published to complement the Code and support its introduction. Copies of the Code and FAQs are also available on the IFIA’s website www.irishfunds.ie.     The publication of the Code follows an invitation by the Central Bank for the Irish funds industry to develop and apply its own corporate governance code in place of the statutory code developed for banks and insurance companies.Following considerable engagement with, and input from, the Central Bank, a draft Code was prepared and earlier this year was circulated to relevant industry participants for consultation. During the consultation process a significant amount of feedback was received. This feedback was considered and discussed with the Central Bank, following which the attached Code was agreed. The Central Bank has requested that the funds industry report on its adoption after the first 12 months of implementation.While the IFIA code is voluntary in nature, the Central Bank considers it “essential” that all Irish authorised CIS adopt the Code, albeit on a voluntary basis.Timeframe for Implementation and ComplianceThe Code becomes effective from 1 January 2012 with a twelve month transitional period. A survey will be carried out within an 18 month period to assess the extent of adoption rates among the industry. Depending on the outcome of the survey and the general approach by the funds industry to the Code, the Central Bank will review its voluntary nature and application at that point.A statement of compliance should form part of the audited financial statements of the CIS/ManCo. If the CIS/ManCo has a year end of 31 December, the first statement of compliance should be included in the financial statements as of 31 December 2012; if the CIS or ManCo has a year end of 30 June, the first statement of compliance should be included in the financial statements as of 30 June 2013.Where a Board of a CIS or ManCo adopts the Code but decides not to apply a particular provision of the Code, it should set out the reasons as to why that provision has not been adopted in the Directors’ Report or alternatively publish the information through a publicly available medium (eg website) detailed in the annual report.What the Code ContainsThe Code has been drafted based on the various existing regulatory and corporate governance procedures currently applied through the Central Bank Notices and the Companies Acts. Furthermore, below are some of the additional key provisions which need to be considered in terms of assessing Board composition on an ongoing basis:  Key ProvisionsThe key requirements contained in the draft Code applicable to the Boards of CIS and ManCos are:  the Board shall be of sufficient size and expertise to adequately oversee the operations of the CIS or ManCo. It is recommended that the Board of Directors will have a minimum of three directors. It is further recommended that the Board comprise a majority of non-executive directors1 and at least one independent director, who would not be an employee, partner, director or significant shareholder of any service provider firm2 receiving professional fees from the CIS or ManCo. it is recommended that at least one director should be an employee of the promoter or investment manager;a minimum of two directors on the Board should be Irish resident;each member of the Board is required to have sufficient time to devote to the role of director and associated responsibilities. The Board shall document the time commitment expected from each director in a letter of appointment. There is a rebuttable presumption that a maximum of eight non-fund directorships may be held without impacting the Director’s time available to fulfil his or her duties as a Director of a CIS or ManCo;all Directors are expected to attend and participate at meetings and an attendance schedule should form part of the annual informal Board performance review process. Directors who reside abroad may attend via telephone or video conference but would be expected to attend at least one meeting per year in person;there should be an informal annual review of the performance of the Board and of each individual Director and a formal documented review taking place at least once every three years;a non-executive Chairman should be appointed to the Board and should be reviewed at least once every 3 years;the Board of Directors of a UCITS fund will be required to meet at least quarterly. For non-UCITS funds, such as QIFs, the Board may meet less frequently if it believes this is justified but this must be disclosed in the Directors' Report that forms part of the annual financial statements of the CIS or ManCo;in considering Director appointments, the Board shall assess and document its consideration of possible conflicts of interest. The Board shall also document its procedures for dealing with any such conflicts and shall review compliance with those procedures at least annually;a CIS or ManCo which constitutes a "public interest entity" within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) companiesRegulations 2010 is obliged to establish an Audit Committee in accordance with the criteria set out therein;Directors must be aware of the relevant policies and procedures of the CIS/Manco and should have received adequate and sufficient training to enable them to discharge their duties.http://www.mccannfitzgerald.ie/McfgFiles/knowledge/4573-Corporate%20Governance%20Code%20for%20Collective%20Investment%20Schemes%20and%20Management%20Companies%20-%20Briefing_3.pdf#page=1McCann FitzGerald Mark White, Ambrose Loughlin, Darragh Murphy and Tony Spratt Ireland Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1859 http://www.comsuregroup.com/news.asp#n7 Six arrests in two weeks for new City insurance fraud unit - Head of industry-funded fraud squad hails unit’s “immediate impact” as it announces arrests across the country.  A new insurance fraud unit that is operated by City of London Police and is funded by the industry has made at least six arrests in its first two weeks, including three men that have been detained over a suspected bogus internet car insurance business.The Insurance Fraud Enforcement Department is a specialist police unit that is funded by the insurance industry and supported by the National Fraud Authority. Insurers will contribute £8.2m a year to fund the squad, according to an announcement by the Association of British Insurers in July 2011.IFED is operated by the City of London police’s economic crime directorate and is designed to provide additional operational capability to tackle insurance fraud, which is valued at £2bn per year.According to a statement issued by City police, IFED, which officially launched on 3 January this year, has made arrests across the country in its first two weeks following “a number of industry reports of policy holders making bogus claims”.MoreIn this sectionProtection spotlight: Long term issue FSA fines RBS insurance subsidiaries £2.2m MetLife UK appoints Friends’ Stephanie Baillie The statement says that the unit has made six arrests across the country, several of which relate to allegations of bogus claims on car, health and home insurance policies. Three men were also arrested in connection with an internet care insurance business that is alleged to have collected premiums without providing any cover. Police said that following the arrests information was received relating to a wider car insurance operation based in the midlands, which are currently being investigated.Detective chief inspector Dave Wood, who heads up IFED, said: “We wanted to make an immediate impact and put out a clear statement of intent, and that is exactly what we have done.“In two weeks we have travelled far and wide to dismantle organised insurance fraud and tackle opportunistic insurance fraud. The challenge for us is to maintain this very high level of performance.” http://www.ftadviser.com/2012/01/18/insurance/six-arrests-in-two-weeks-for-new-city-insurance-fraud-unit-sxCfCxuKuAxXbtyHL8QI9L/article.html Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1858 http://www.comsuregroup.com/news.asp#n8 FSA fines RBS insurance subsidiaries £2.2m - Direct Line Insurance and Churchill Insurance Company fined for improperly altering files requested by the regulator.The Financial Services Authority has fined RBS subsidiaries Direct Line Insurance and Churchill Insurance Company £2.17m over its improper altering of complaint files requested by the regulator for review.During the collation of 50 complaint files requested by the FSA, 27 were altered improperly before they were submitted because the firms failed to act with due skill, care and diligence, the watchdog said. The FSA said that while the failings, which included the forging of signatures on some documents, were serious, the majority of the alterations were minor in nature and none of the changes resulted in any customer detriment.While the fine relates specifically to failings by Direct Line and Churchill, since the breach occurred the relevant business and liabilities of the firms have been transferred to UK Insurance Ltd. UKI, which is owned by the Royal Bank of Scotland, is therefore responsible for paying the fine.In May 2009, as part of its ongoing supervision of the firms’ complaints handling capabilities the FSA identified a number of areas where improvements were needed. In February 2010 the FSA informed the firms that it would undertake a review of closed complaint files.In preparation for this review the firms asked a major accountancy firm to do a sample review, with 28 per cent of the 110 files reviewed failing the assessment.In April 2010, the FSA received 50 files for review. At around the same time, the regulator received information that some of those files may have been altered or created and so, in June 2010, it visited the firms’ offices at short notice. Following a detailed internal investigation conducted by the firms, it was revealed that 27 of the 50 files had been altered before they were sent to the FSA and seven internal documents were found to contain staff signatures forged by one member of staff. Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: “This is a serious breach. The firms’ attempt to ensure that complete files were provided to the FSA backfired. “The firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues. The firms’ management did not know what changes had been made or when.“In this case, the alterations did not impact on the FSA’s ability to do our job. The significant penalty is however intended to underscore to firms that it is of critical importance that material provided to the FSA must reflect the picture as it is – not as they might like it to be.”The two firms agreed to settle the case at an early stage and therefore qualified for a 30 per cent discount. Without the reduction the FSA would have fined them £3.1 million.http://www.ftadviser.com/2012/01/18/insurance/fsa-fines-rbs-insurance-subsidiaries-m-Qhl90ryv92Lw9qlwzODVBL/article.html Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1857 http://www.comsuregroup.com/news.asp#n9 Vantis tax director guilty of £70m fraud - David Perrin, a professional tax adviser at Vantis, has been convicted of defrauding taxpayers of £70m, HMRC has confirmed.Perrin, who worked for the Inland Revenue in the late 80s and early 90s, was found guilty at Blackfriars Crown Court for “cheating the revenue by dishonestly submitting and dishonestly facilitating and inducing others to submit claims for tax relief which falsely stated values of shares which were gifted to charities”.Confiscation proceedings are under way and he will be sentenced on 9 February.Between 2005 and 2006 Perrin had devised and operated a tax avoidance scheme which he sold to wealthy taxpayers in order to exploit the law on giving shares to charity, allowing him to pocket more than £2m in fees.He used a network of finance professionals to advise more than 600 wealthy clients to buy shares, worth a few pence each, in four new companies he had set up.He then listed the companies on the Channel Islands Stock Exchange and paid people money from an offshore account to buy and sell the shares to inflate their price.The share owners then donated 329 million shares to various unsuspecting registered charities and tried to claim £70m tax relief on a total of £213m of income and company profits.The scheme proved so popular that Vantis employees performed a ‘smug’ celebratory song at their annual conference, to the tune of “I will Survive”, a HMRC spokesperson said.It included the verse:“They should have changed that stupid lawThey should have buggered charityBut they have left that lovely tax relief For folks to pay to me”The Bedfordshire-based deputy MD had also spent his cut of the stolen cash on expensive second homes, exotic holidays, works of art and luxury cars.Jim Graham, HMRC criminal investigator, said: "With his knowledge of the tax system, Perrin thought that he was one step ahead of both HMRC and the law."This cynical fraud not only stole millions of pounds from taxpayers, but also conned innocent charities into accepting gifts of virtually worthless shares, just so Perrin could inflate his own criminal earnings."http://www.accountingweb.co.uk/article/vantis-tax-director-guilty-%C2%A370m-fraud/523212 Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1856 http://www.comsuregroup.com/news.asp#n10 Jersey - the good and bad compliance message - John Harris at the meeting with the Jersey Compliance Officers Association talked about Compliance concerns but also said are compliance is as strong as anyones....!!!Compliance concerns raised - on Tuesday 17th January 2012, the following matters were reportedA COMPANY director faces a ban after he overrode both the firm’s board and its compliance function to take on a ‘toxic’ Eastern European client connection, it has been revealed.And the director faces a public statement being made about him, according to the Island’s most senior finance regulator.Meanwhile, in a different case the financial regulator acted against a regulated firm for trying to discipline a compliance manager for raising concerns about bad practice.The director general of the Jersey Financial Services Commission, John Harris, said the compliance manager faced ‘misconceived and intimidatory disciplinary proceedings’ for raising the concerns.Mr Harris highlighted the cases when he spoke to the Jersey Compliance Officers Association last week.http://www.thisisjersey.com/business/2012/01/17/compliance-concerns-raised/Compliance: We are as strong as anyone, Jersey tells USA - it was reported on Monday 16th January 2012, 3:00PM GMT.John Harris  at the meeting with the Jersey Compliance Officers Association OFFICIALS from Jersey went to the US Embassy in London last month to show the Americans that the Island’s financial compliance armoury is every bit as strong as that of the United States’.And French government officials are expected to come to the Island in the next couple of months on a fact-finding visit to see for themselves how well the Island’s finance industry is regulated.Details of both visits were revealed during a talk given to members of the Jersey Compliance Officers Association earlier this week by the executive head of the Island’s financial regulator, John Harris.Mr Harris, the director general of the Jersey Financial Services Commission, told the audience of 150 at the Town Hall that he was among a party who travelled to London just before Christmas.And they took with them information that proved that Jersey’s compliance with international standards was even better than that of the United States in a number of areas.http://www.thisisjersey.com/business/2012/01/16/compliance-we-are-as-strong-as-anyone-jersey-tells-usa/ Wed, 18 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1854 http://www.comsuregroup.com/news.asp#n11 Spearpoint launches £150m Arch Cru suit - Administrators of the failed Arch Cru funds are lining up a £150m High Court battle against the funds’ former investment manager.  Guernsey-based Spearpoint has submitted a claim alleging that Arch Financial Products breached fiduciary duties in running the funds and that it also took £5.4m in “secret profits” – claims that Arch strongly denies.The suit is being led by Hugh Aldous, chairman of the boards of the 18 sub-funds that the Arch Cru fund range was invested in.The legal claim includes eight sub-claims based on the various investments that were made by Arch within the funds.Spearpoint has filed a $162m (£105.6m) sub-claim relating to losses suffered by six of the cells from Arch’s investments in Greek shipping deals, which Spearpoint said were made against the advice of Arch’s own lawyers.Arch also invested $167m in loans to finance the renovation of seven ships, a deal which Spearpoint claimed amounted to a “breach of duty” and “substantially exceeded the mandate” of the six cells which invested in the deal.Spearpoint alleges that Arch invested “huge sums” in investments that “it lacked the necessary experience and skill competently to assess, arrange and implement”.It is also alleged that Arch took £3m in “secret profits” from Lonscale Limited, a shell company which it allegedly designed to direct payments from the cells back to Arch.If Spearpoint was to win the £150m legal battle it would provide a significant boost for investors in the failed Arch Cru fund range, who have been facing substantial losses since the funds’ suspension in March 2009.However, Robin Farrell, chief executive of Arch Financial Products, denied the “scattergun” allegations and hit back at the lawsuit, describing it in a statement as “an extraordinarily poorly informed document” that “may mislead investors”.“Arch and its principals vigorously deny these unfounded allegations in their entirety and will respond fully through the court process,” he said.“Arch believes this case to have no merit and that the particulars of claim have been designed to attempt to shift blame away from Capita and to further stigmatise AFP.”Arch claimed the majority of blame for Arch Cru’s failure lay with Capita, the authorised corporate director for the Arch Cru range, and the FSA for its “poorly considered” intervention when the funds were suspended.“The ramifications of the decisions made by Capita and the FSA in 2009 will be felt by investors for years to come,” Arch said in a statement. “The events leading to the suspension of the funds and subsequent actions by Capita and the FSA ‘hardwired’ the losses by preventing Arch from taking steps that would in the ordinary course be taken by any investment manager to mitigate such losses.”Capita rejected allegations that “losses were caused by ‘interference’ by Capita in Arch’s management of the funds”.“Arch was responsible for the investment decisions made by the Guernsey cells, and cannot now try to deflect responsibility for those decisions onto Capita,” it said in a statement.Arch also alleges a conflict of interest in Mr Aldous’s role as chairman of the Arch Cru cells as well as chairman of Capita Sinclair Henderson, a subsidiary of Capita which provides fund accounting, company secretarial and administration services.“Arch does not believe investors’ interests are being served well as a result of the significant conflict in having Capita’s director Mr Aldous as chairman of SPL Guernsey ICC,” it said. “AFP does not see how Mr Aldous can possibly discharge his obligations to the SPL Guernsey ICC cells properly, in circumstances where Capita, as a major participant in the £54m compensation package, is in direct conflict with UK fund investors in terms of the adequacy of the compensation package.” The FSA and Mr Aldous declined to comment.http://www.ftadviser.com/2012/01/16/investments/multi-asset/spearpoint-launches-m-arch-cru-suit-2fq40XXWy4Wr4Jep4QOCDM/article-1.html Mon, 16 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1853 http://www.comsuregroup.com/news.asp#n12 Testing your ABC – the Bribery Act six months on - The Bribery Act 2010 came into force on 1 July 2011. There were no transitional or grace periods, so businesses needed to comply from that date. But have they? In this article, we look at what the Act does, “adequate procedures” and the main flashpoints. Businesses that have not yet carried out their compliance analysis should do so urgently; businesses that have should review the effectiveness of their procedures.    What’s It All About? Key Definitions Relevant Function or Activity The Act focuses on a “relevant function or activity” (which we refer to as a Function), which is key to understanding the breadth of the offences. This is any:function of a public nature;activity connected with a business;activity performed in the course of a person’s employment; oractivity performed by or on behalf of a body of persons,in circumstances where any of the following conditions apply to the person performing it:he is expected to perform it in good faith and/or impartially; orhe is in a position of trust by virtue of performing it.Critically, the Act catches Functions performed outside the UK.Improper Performance Many of the offences refer to “improper performance” of a Function. The Act sets out guidance on what constitutes improper performance and sets a test of “expectation”. This is what a reasonable person in the UK would expect, ignoring any local custom or practice unless the law of the relevant country allows or requires the practice.What’s It All About? The OffencesThe General Bribery Offences The Act creates two general bribery offences, which apply to all businesses, whether private or public:Bribing another person: a person commits an offence by offering, promising or giving a financial or other advantage to another person, directly or through an intermediary: intending that advantage to induce a person to perform improperly a Function or to reward a person for so doing (whether or not it is the same person to whom the advantage is offered); orknowing or believing that accepting the advantage would in itself be improper performance of that Function.Being bribed: a person commits this offence by requesting, agreeing to receive or accepting a financial or other advantage, directly or through a third party, for his own or someone else’s benefit: intending that a Function should be performed improperly (by anyone), as a result;where the request, agreement or acceptance is itself improper performance by that person of a Function;as a reward for the improper performance by any person of a Function; orwhere that person, or anyone at his request or with his agreement, performs a Function improperly in anticipation or because of agreement to accept the advantage.Usually, it does not matter whether any relevant person knows the performance is improper.Bribing Foreign Public OfficialsIt is an offence to bribe a “foreign public official”. Broadly, this means a person outside the UK who holds any legislative, administrative or judicial position, exercises a public function for any country or public agency or enterprise or is an official or agent of a public international organisation. The offence bites if a person:intends to influence the official in his relevant capacity;intends to get or keep business or a business advantage; andoffers or promises, directly or indirectly, a bribe to the official (or another person at the official’s request or with his agreement) and the written law that applies to the official does not allow or require him to be influenced.Failure of Commercial Organisations to Prevent Bribery Any organisation (a partnership or incorporated body), formed or carrying on business in the UK (the Act calls this a “relevant commercial organisation”), commits an offence if it allows anyone connected with it (the Act calls this an “associated person”) to bribe another person intending to get or keep business or a business advantage for the organisation. An “associated person” is a person who performs services by or on behalf of the relevant commercial organisation.It is a defence for an organisation to prove it had in place adequate procedures to prevent persons associated with it from engaging in this conduct. The Act requires the Secretary of State (the Ministry of Justice (MoJ)) to publish guidance on the procedures organisations should put in place.If You Get It Wrong? Penalties for Breach The maximum penalty for an offence is 10 years’ imprisonment and/or an unlimited fine. For the “failure to prevent” offence the fine alone applies.Where the bribery, being bribed, or bribing a foreign public official offences are committed by a company, or where section 1, 2 and 6 offences are committed by a body corporate, a senior officer (or person purporting to act in that capacity) will also be guilty of  2an offence if the offence was committed with his consent or connivance. Where the bribery act took place outside the UK (and the underlying offence was only committed because the person committing it is a UK body corporate), the senior officer or person also needs a “close connection” with the UK to be caught.Who Does It Apply To? Extraterritorial Effect The Act catches conduct outside the UK if the person engaging in it has a close connection with the UK (including being a British Citizen, an individual usually resident in the UK or a body incorporated in any part of the UK). There are limited defences, mainly for the security services.Critically, the “failure to prevent” offence applies to make organisations caught by it liable for the acts of “associates” even where the associate has no connection with the UK and does not commit an offence under the laws that apply to it.What are “Adequate Procedures”? Purpose of the Guidance Whilst the MoJ’s Guidance is the determinative guidance for the purposes of the Act, the MoJ points out it should complement other existing guidance rather than replace it. The Guidance is short and high-level. It addresses some concerns expressed in the run up to the Act and sets out six principles, which organisations should assess how best to apply to their businesses. Adequate procedures should be informed by the following six principles:Proportionate Procedures which are clear, practical, accessible, effectively implemented and enforcedTop-level commitment A corporate culture that does not accept briberyRisk assessment Risk assessment that takes account of the nature and extent of exposure – it should be periodic, informed and documentedDue diligence Businesses should take a proportionate and risk-based approach to carrying out due diligence on those they do business with to mitigate the risksCommunication Procedures must be embedded and understood throughout the organisation – and communication should be proportionate to risksMonitoring and review The Guidance suggests actions organisations might take. Bearing in mind each principle, organisations should devise a practical and appropriate action plan. While the Act applies to all businesses, the guidance below focuses on the likely practical impact for financially regulated institutions in the UK.What Should Financial Institutions Do? Review of proceduresAll financial institutions should regularly review their procedures, systems and controls, paying particular attention to how they deal, directly or through agents, with overseas officials or entities. All businesses should remember that these requirements are different to any imposed by the Financial Services Authority (FSA) or any other sectorial regulator. FSA Rules must be complied with (in particular, FSA’s recent Financial Crime Guide which contains a section on bribery), but compliance with the Act and the Guidance is a separate requirement. Businesses that fall under the US Foreign Corrupt Practices Act (FCPA) must also be aware there are significant differences between the UK and US legislation, so compliance with one will not mean compliance with the other.Senior Management Buy-in Senior management must devote sufficient resources at the right level and the board must commit to the programme. Senior management must push through the message that compliance is critical and that staff must take the firm’s policies and their responsibilities seriously. It must stand behind any disciplinary actions taken if staff do not comply, and support investigations into business relationships where there is a risk of bribery. For FSA-regulated firms this is essential to assure the FSA that firms are complying with its principles.ABC Team OrganisationAnti-bribery and corruption programmes should not be left solely to one department. Organisations should have appropriately constituted project teams comprising representatives from all relevant parts of the business. Such teams should identify all areas of the organisation that may be susceptible to bribery.They should look at combinations of:ProductsServicesCustomersDistributorsJoint Venture or similar partnersLocal agents and introducersJurisdictions of operationThe project team should also analyse areas of HR, customer service and other functions that may entail bribery risks.Project Team Output Outputs, both initial and ongoing, should include:a statement of corporate values;general and specific procedures and guidance tailored to the business;clear statements of the consequences of attempted bribery making clear the firm will not tolerate such behaviour;a monitoring programme committed to changing policies and procedures when necessary;a reporting programme allowing safe whistleblowing;identification of agreements the organisation may enter into that may benefit from anti-bribery clauses; anda training programme ensuring the right staff are trained in matters relevant to them.Regulators should see a clear link between the various financial crime prevention limbs of a firm’s business. The relevant teams should ensure they share information and concerns promptly.What Will Be Prosecuted? On the same day the MoJ issued its Guidance, the two UK prosecuting authorities, the Director of Public Prosecutions and the Serious Fraud Office (SFO), issued guidance on the factors that would lean to prosecution for bribery, or against prosecution.The Basic Principle for ProsecutionProsecutions will not be brought unless there is enough evidence for a realistic prospect of conviction and it is in the public interest to prosecute. The prosecutors have given some indication of when there may or may not be a public interest in prosecuting.It is likely to be in the public interest to prosecute where:there is likely to be a significant sentence on conviction;there is premeditation with an element of corruption;the offence would facilitate more serious offending; orthose involved take advantage of a position of authority or trust.On the other hand, there would is unlikely to be a public interest, so prosecution would be less likely, where:the likely penalty would be nominal;minor harm was caused, in a single incident; orthe business took a proactive approach to self-reporting and remediation.For the offence of bribing foreign public officials the factors change slightly, so that prosecution would be favoured where:there are large or repeated payments;facilitation payments are made as a planned or accepted way of doing business;there is an element of active corruption of an official; orthe organisation has a clear policy which has not been followed.Against prosecution would be:the payment was a small, single payment;the organisation took a genuinely proactive approach to self-reporting and remedial action;clear and appropriate policies were in place which have been followed; orthe payer was in vulnerable position.It is worth noting that there is no automatic reporting defence to bribery offences (unlike money laundering offences). However, the authorities encourage open dialogue and, of course, bribery may involve the proceeds of crime and so be reportable to the Serious Organised Crimes Agency under money laundering laws.It is also important to note that the authorities are likely to take a dim view of organisations that are aware their employees face high bribery risks – for example where they frequently travel to countries where it is common for officials to try to extort grease payments – and are aware that their staff sometimes make payments, yet put in place procedures that claim a zero tolerance of bribery while failing to take any action against those who bribe. The SFO has said it would rather hold constructive dialogue with firms that are trying gradually to eradicate bribery and discuss problems with them.Common Concerns The Guidance and the Prosecutors’ Guidance went some way to addressing a number of the big questions that concern businesses, without giving complete comfort on any.Hospitality “Bona fide hospitality and promotional or other business expenditure which seeks to improve the image of a commercial organisation better to present products and services or establish cordial relations is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour”.The question is whether the hospitality is provided with the relevant criminal intention. The “lavishness” of any hospitality is one (but only one) of the circumstances to be taken into account in determining this.However, there are some helpful examples in the Guidance: e.g. “an invitation to foreign clients to attend a Six Nations match at Twickenham as part of a public relations exercise designed to cement good relations or enhance knowledge in the organisation’s field is extremely unlikely to engage section 1 as there is unlikely to be evidence of an intention to induce improper performance of a relevant function”. (The answer might be different if the invitation was to a foreign public official, as the required intention is different.)What should firms do? Establish policies and procedures controlling the provision of hospitality. Consider the demonstrable purpose of any hospitality. Consider imposing limits on the value and type of hospitality to be provided. Ensure recipients clearly understand hospitality is provided on a no-obligation/no-expectation basis. Ensure your firm makes payment for hospitality directly to the provider (rather than making cash reimbursements to the client). Consider any hospitality to foreign public officials very carefully.Facilitation Payments Despite the MoJs protestations that the guidance would be proportionate and practical, a hard line has been retained on facilitation payments. Firms and individuals seeking comfort must rely on the mercy of the DPP or SFO, which will look to the “public interest” in initiating prosecutions.“As was the case under the old law, the Bribery Act does not … provide any exemption for such payments … exemptions in this context create artificial distinctions that are difficult to enforce, undermine corporate anti-bribery procedures, confuse anti-bribery communication with employees, … perpetuate an existing ‘culture of bribery’ and have the potential to be abused”.It is recognised that “individuals may be left with no alternative but to make payments … to protect against loss of life, limb or liberty”. This may provide a defence of duress (or discourage prosecution), but other forms of duress or extortion are not recognised.What should firms do? Individuals are placed in a difficult position. A firm whose associate bribes a foreign public official is liable to prosecution for “failure to prevent”. Its defence to that charge is to prove – to the satisfaction of a jury – that its procedures are “adequate to prevent” bribery. For its protection, it must have clear procedures, which unambiguously prohibit facilitation payments (this is common even in the US despite the more flexible approach under the US FCPA). Firms with a “genuinely proactive approach, involving self-reporting and remedial action” are less likely to be charged.Associates There has been significant concern over what constitutes an “associated person”, and whether a business is responsible for the contractors its joint venture associate uses. It will be responsible, where they provide a service to the business. A firm is responsible for its “associates”. An associate is a person who performs services for or on behalf of an organisation. The capacity in which they do this or their legal relationship with that organisation is not determinative. One must consider “all the relevant circumstances”. A joint venture (JV) in itself would not give rise to association unless the JV company performed services for a principal (or unless a contractual JV gave the principal sufficient control).The Guidance recognises that the “broad scope means that contractors could be associated persons to the extent that they are performing services for or on behalf of a commercial organisation. Also, where a supplier can properly be said to be performing services for a commercial organisation rather than simply acting as a seller of goods, it may also be an ‘associated person’”.What should firms do? Identify associates. Consider suppliers – proportionately. Presumably a utility supplier would be outside the scope, although the guidance is unhelpful on this point. Manage the “supply chain” by imposing restrictions on the primary supplier.Territorial Scope Businesses whose only UK connection is a London listing had been concerned whether they would be a “relevant commercial organisation” to whom the failure to prevent bribery offence would apply. The Guidance clarifies that listing alone is not enough. The Government would not expect for example “the mere fact that a company’s securities had been admitted to the UK Listing Authority’s Official List … in itself to qualify that company as carrying on a business or part of a business in the UK, and therefore falling within the definition of a relevant commercial organisation”. (This is in contrast to the position under the FCPA.)What should firms do? Consider whether there is any other connection to the UK.Where there is a UK branch of an overseas entity – is the whole of that entity a relevant commercial organisation needing to comply with the Act? Yes, the Act will apply to the entity as a whole. But, unlike a branch, a UK subsidiary of an overseas parent will not by virtue of that legal relationship alone make the overseas parent a relevant commercial organisation. “Having a UK subsidiary will not in itself mean that a parent company is carrying on a business in the UK, since a subsidiary may act independently”.What should firms do? Develop procedures covering at least the whole legal entity, but also consider associates.So RememberIt is essential that all businesses covered by the Act understand that:It is an offence to bribe, or receive a bribe from, anyone, not just foreign public officials.A bribe includes even the smallest facilitation payment, regardless of whether it is common place to make the payment in the circumstances or location where it occurs.Disproportionate corporate marketing or hospitality may constitute a bribe.The scope of the Act catches not only acts that take place in the UK, but also any acts by British nationals or overseas branches of British companies that take place anywhere in the world.The failure to prevent bribery offence applies to any body corporate that carries on even only part of a business in the UK.The failure to prevent bribery offence applies where a person associated with the relevant company (for example as an agent) gives a bribe intending to give the company a business advantage.“Adequate procedures” is a corporate defence to the offence of failing to prevent bribery.A business’ best protection is a thorough and documented risk assessment, backed up with strong policies and procedures, supported by senior management, implemented and monitored regularly.http://www.lexology.com/library/document.ashx?g=ddfcc3ad-9522-4ef0-8a3f-ad272e5e76d9#page=1SNR Denton Roy Locke, Jr, Dominic Sedghi, Madeleine de Remusat, Emma Radmore and Dominic Gilmore United Kingdom Mon, 16 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1844 http://www.comsuregroup.com/news.asp#n13 Constructive dismissal claim following employee use of linkedin - Regular readers of this blog will no doubt be aware from my recent postings of the various employment law issues which can arise following the use of social networking forums such as Facebook and Twitter by employees (see, e.g., ‘Further Employment Law Facebook Issues’). I have now noticed a further article published yesterday on the Daily Mail website which reports on how a top executive alleges that he was forced to leave his job after he posted his details on LinkedIn, a networking site for professionals.    As the article reports, John Flexman, who earned £68,000 per year in his role as a Graduate and Development Manager, is currently claiming constructive dismissal before an Employment Tribunal following his resignation from the company, BG Group, in June last year.According to the article, Mr Flexman’s resignation was sparked by a dispute which arose when his employers became disgruntled after he posted his CV to the LinkedIn website and ticked a box indicating that he was interested in ‘career opportunities’. After being ordered to remove his CV from the website, he was then invited to attend an internal disciplinary hearing for ‘inappropriate use of social media.’  As the article reports, according to BG Group, Mr Flexman’s actions were in breach of its policy on conflicts of interests under which employees are precluded from ticking the ‘career opportunities’ box. The hearing is still ongoing before the Reading Employment Tribunal.Although the case is being reported very much as an issue relating to Mr Flexman “posting his CV on LinkedIn” it would appear that there is a bit more to it than that in that he appears to have posted certain information on his LinkedIn profile which portrayed the Company in a negative light. The gist of this appears to be that he cited certain bad practices of the Company, for example, high staff attrition rates and his success in reducing that attrition rate.Whilst I don’t know the specifics of this particular case, in general terms an employee is very likely to face disciplinary action if they post on a public website comments which are detrimental to their employer.The issue of an employee looking for work elsewhere is an interesting one though. Whilst, there is clearly no issue with an employee looking for alternative work this is, in most cases, done discreetly with the current employer only finding out about it once the employee has been offered employment elsewhere.As a general rule, whilst in most cases it is not a particularly advisable thing to do, there is nothing to prevent an employee making it known publicly that they are looking for or would consider employment elsewhere. It will be interesting to see whether the Tribunal in the present case form a different view in circumstances where there was a policy relating to the use of the 'career opportunities' box on LinkedIn.I can though envisage certain situations where employees holding certain roles (and most probably senior roles) could conceivably have action taken against them if they publicly announced that they were looking for work elsewhere. In such circumstances and depending exactly what the employee said and to what extent it was detrimental to the employer's interests an argument could, potentially, be made that there were grounds for dismissal on the basis of “some other substantial reason”. However, whether this was possible or not would depend very much on the facts of the case.Given the number of employees who use LinkedIn for professional networking purposes, it will certainly be interesting to see the outcome of this case, particularly since, according to the article, it is thought to be the first in the UK in which an employee has claimed constructive dismissal following a dispute over the posting of professional details to LinkedIn.http://www.morton-fraser.com/blog/employment/2151_constructive_dismissal_claim_following_employee_use_of_linkedin#page=1Morton Fraser Innes Clark United Kingdom   . Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1851 http://www.comsuregroup.com/news.asp#n14 IAIS Examples of ML and suspicious transactions involving insurance - This document contains examples of money laundering and suspicious transactions involving insurance. It was originally created as an appendix to the IAIS Guidance paper on antimoney laundering and combating the financing of terrorism (October 2004) and is updated periodically to include additional examples identified.The trigger Indicators listed areThe following examples may be indicators of a suspicious transaction and give rise to a suspicious transaction report:• application for a policy from a potential client in a distant place where a comparable policy could be provided “closer to home”• application for business outside the policyholder’s normal pattern of business• introduction by an agent/intermediary in an unregulated or loosely regulated jurisdiction or where organised criminal activities (e.g. drug trafficking or terrorist activity) or corruption are prevalent• any want of information or delay in the provision of information to enable verification to be completed• an atypical incidence of pre-payment of insurance premiums• the client accepts very unfavourable conditions unrelated to his or her health or age• the transaction involves use and payment of a performance bond resulting in a crossborder payment ( wire transfers) = the first ( or single) premium is paid from a bank account outside the country• large fund flows through non-resident accounts with brokerage firms• insurance policies with premiums that exceed the client’s apparent means• the client requests an insurance product that has no discernible purpose and is reluctant to divulge the reason for the investment• insurance policies with values that appear to be inconsistent with the client’s insurance needs• the client conducts a transaction that results in a conspicuous increase of investment contributions• any transaction involving an undisclosed party• early termination of a product, especially at a loss, or where cash was tendered and/or the refund cheque is to a third party• a transfer of the benefit of a product to an apparently unrelated third party• a change of the designated beneficiaries (especially if this can be achieved without knowledge or consent of the insurer and/or the right to payment could be transferred simply by signing an endorsement on the policy)• substitution, during the life of an insurance contract, of the ultimate beneficiary with a person without any apparent connection with the policyholder• requests for a large purchase of a lump sum contract where the policyholder has usually made small, regular payments• attempts to use a third party cheque to make a proposed purchase of a policy• the applicant for insurance business shows no concern for the performance of the policy but much interest in the early cancellation of the contract• the applicant for insurance business attempts to use cash to complete a proposed transaction when this type of business transaction would normally be handled by cheques or other payment instruments• the applicant for insurance business requests to make a lump sum payment by a wire transfer or with foreign currency• the applicant for insurance business is reluctant to provide normal information when applying for a policy, providing minimal or fictitious information or, provides information that is difficult or expensive for the institution to verify• the applicant for insurance business appears to have policies with several institutions • the applicant for insurance business purchases policies in amounts considered beyond the customer’s apparent means• the applicant for insurance business establishes a large insurance policy and within a short time period cancels the policy, requests the return of the cash value payable to a third party• the applicant for insurance business wants to borrow the maximum cash value of a single premium policy, soon after paying for the policy• the applicant for insurance business use a mailing address outside the insurance supervisor’s jurisdiction and where during the verification process it is discovered that the home telephone has been disconnected. The above indicators are not exhaustive.http://www.iaisweb.org/__temp/Examples_of_money_laundering.pdf Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1838 http://www.comsuregroup.com/news.asp#n15 Jersey Laws and orders brought into force in 2012 - The Banking Business (General Provisions) (Amendment No. 3) (Jersey) Order 2011 comes into force on 25 January 2012. The Order amends the Banking Business (General Provisions) (Jersey) Order 2002 in relation to deposit taking.      The Income Tax (Amendment No. 38) (Jersey) Law 2011 came into force on 1 January 2012, with the exception of Part 4, which will come into force on 1 January 2013. The Law amends the Income Tax (Jersey) Law 1961 by repealing those provisions which impose a liability to tax on certain individuals who own shares in companies taxed at 0% or 10%, either by deeming the individual to have received taxable dividends ("deemed dividends") or by attributing the profits of the company to the individual, as if they were the individual’s profits ("full attribution").  Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1839 http://www.comsuregroup.com/news.asp#n16 New UK protected cell regime for UK umbrella OEICs - The long-awaited protected cell regime for UK umbrella OEICs has now been introduced by the Open-Ended Investment Companies (Amendment) Regulations 2011. The Regulations came into force on 21 December 2011, together with associated amendments to the FSA’s Collective Investment Schemes Sourcebook.  The Regulations and the revised COLL rules have also introduced the possibility for cross investment between sub-funds of an OEIC.    What action does an ACD need to take arising from the Regulations?The action required will depend on whether the OEIC was authorised before or after 21 December 2011 and on whether or not the ACD is a micro-business.  The FSA has recently contacted ACDs to provide background and set out the different scenarios.In this briefing, we look at the detail as follows:The key ring-fencing provisionsConversion for existing OEICs and application to new OEICs (including micro-businesses)Effect on new and existing contracts entered into by the OEICForeign law contractsCross investment --------------------------------------------------------------------------------The key ring-fencing provisions Previously, sub–funds of UK umbrella OEICs each effectively had their own assets and were treated for almost all day to day purposes as separate entities, but their liabilities were not ring–fenced. This meant that if the liabilities of one sub–fund exceeded its assets, a creditor could pursue one or more other sub–funds in the umbrella to satisfy its debt.  In practice, such an event has not occurred, even in the recent financial crisis.  It has, however, increasingly been seen as a concern for some investors, and therefore for UK providers, that UK umbrella OEICs could not offer ring–fencing of liabilities, unlike Luxembourg, Dublin and the Channel Islands.These changes are welcome and will align the UK with other main fund centres.  However, the changes do raise immediate issues which managers need to be aware of now with regard to new contracts being entered into by an OEIC as well as around the conversion process.The key ring-fencing provisions in the Regulations are:Regulation 11A(1) which provides that where an OEIC is established as an umbrella company, the assets of each sub-fund shall belong exclusively to that sub-fund.Regulation 11A(2) which provides that any liability incurred by or attributable to a sub-fund shall be discharged solely out of the assets of that sub-fund.Regulation 11A(3) renders void both any provision in any document involving the OEIC that is inconsistent with paragraphs (1) and (2) of regulation 11A and any attempt to apply assets in contravention of these paragraphs (although this does not mean contracts the OEIC has entered into can be ignored – see below).Despite these restrictions, certain assets held or liabilities incurred by the OEIC and which are not attributable to a particular sub-fund can be allocated between all of the sub-funds in a manner which the ACD considers fair to shareholders (Regulation 11A(4)) (and this will typically be pro-rata based on each sub-fund’s share of total NAV).We have included relevant links at the end of this briefing.--------------------------------------------------------------------------------Conversion for existing OEICs and application to new OEICsExisting OEICs Existing OEICs (regardless of whether the scheme is a UCITS, NURS or QIS) have until 20 December 2013 to transition to protected cell status.  This may be extended by the FSA at its discretion for particular OEICs on application and OEICs operated by ACDs that are micro-businesses have a further year – see below.The transition period does not apply in respect of new agreements or contracts entered into by the OEIC.¹ With effect from 21 December 2011, the OEIC may not enter into any new agreement or contract which is inconsistent with the segregated liability provisions of Regulations 11A(1) and (2) unless it is a transaction or contract subject to a master agreement which was in force prior to 21 December 2011.In order for existing OEICs to make the conversion, an application under Regulation 21 needs to be made to the FSA notifying the following changes:i.The Instrument of the OEIC needs to be amended to reflect the required disclosure set out in the Regulations and in COLL 3.2.6R:“the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any other purpose.”ii.At the same time, the Prospectus will need to be amended to reflect the segregated liability provisions in the Regulations.  COLL 4.2.5(2A) sets out the mandatory disclosures to reflect the segregated nature of the sub-funds and also to warn investors that whilst segregated liability and cross investment are provided for under the Regulations, there might be a risk that these provisions would not be recognised under a foreign law contract or by a foreign court.iii.In addition to the mandatory disclosures required in the Prospectus, amendments will also need to be made to provisions of the Prospectus describing the process of termination of a sub-fund (since a sub-fund can now be terminated in accordance with the Insolvency Act in much the same manner as the umbrella itself). Changes may also be made to provide for cross investment between sub-funds.iv.Disclosures in the KIID and/or the Simplified Prospectus will need to be amended.v.The ACD must, at the same time as the Regulation 21 application, provide a notification in writing to the FSA confirming that the OEIC does not have any agreements or contracts with a third party containing provisions that are inconsistent with paragraphs (1) and (2) of Regulation 11A.As an exception to the usual requirement under the OEIC Regulations, a solicitor’s certificate is not required for the Instrument change described above.  In making changes to the Prospectus and notifying shareholders, COLL 4.3 will need to be considered.OEICs authorised on or after 21 December 2011For OEICs authorised on or after 21 December 2011, the Regulations apply.  Therefore, the scheme documentation and agreements entered into by the OEIC will need to comply with the protected cell requirements immediately.Micro-businessesAn existing OEIC which is operated by an ACD which is a micro-business benefits from two carve outs.  Such an OEIC:has until 20 December 2014 to convert to protected cell status; andcan, during the period up to the earlier of the expiration of the 3 year transitional period and conversion to protected cell status, enter into contracts which are non-PCC compliant.When converting, such OEICs still need to renegotiate or terminate contracts which are inconsistent with PCC status in order to convert within the transitional period since a contracts confirmation must also be provided to the FSA.Under the Regulations, an OEIC will fall under the micro-business carve-out where its ACD has fewer than 10 employees at the later of the date of authorisation or 21 December 2011.  For the purposes of assessing whether an ACD is a micro-business, Regulation 9 provides that employees of a separate business to the ACD who are employed for the purpose of the ACD must be included.  Furthermore, under Regulation 8, the number of employees is calculated by dividing the total number of hours per week for which all employees of the ACD are contracted to work by 37.5.  Regulation 9 does suggest that  a more expansive approach should be taken to deciding on who should be regarded as a possible employee.  The assessment required may not always be straightforward, and note that the FSA has indicated it will not discuss the status of particular individuals in making the assessment.--------------------------------------------------------------------------------Effect on new and existing contracts entered into by the OEICAs mentioned above, with effect from 21 December 2011, an OEIC, regardless of whether or not it has transitioned to protected cell status, cannot enter into any new agreement or contract (unless it is pursuant to an existing master agreement such as an ISDA or stocklending agreement entered into before 21 December 2011) which is inconsistent with the segregated liability provisions of the Regulations (Regulation 4(1)).Furthermore, when applying to the FSA under the Regulation 21 procedure to convert the OEIC to protected cell status, a notification must be given confirming that the OEIC is not party to any agreement or contract which is inconsistent with the segregated liability provisions.  Therefore, those agreements need to be identified and reviewed.  If there is any inconsistency with the statutory segregation provisions, the offending terms of the agreement need to be either amended or the agreement terminated in order that the required confirmation can be given to the FSA.Under Regulation 11A(3) any provision in an agreement will be void to the extent that it is inconsistent with the statutory segregation of assets and liabilities.  This begs the question as to why it is necessary to amend an offending term if it will be unenforceable as a matter of law in any case.    The policy rationale would seem to be two-fold:Firstly, it adds certainty insofar as it is preferable to amend an offending term rather than allow it to be severed from an agreement.Secondly, in the case of foreign law contracts or a contract falling to be adjudicated upon in a foreign court, it is preferable and still necessary to expressly provide for segregation of liabilities and assets since the Regulations will not automatically apply in that context.Regardless of any contagion risk due to those limited circumstances where the Regulations would not apply, it remains that it will be a regulatory breach by the OEIC and the ACD to either allow the OEIC to be party to a non-PCC compliant agreement (after the earlier of conversion or expiry of the transitional period) or for the OEIC to enter any offending agreement.Given that there is a restriction on the OEIC entering into any new contracts which are non-PCC compliant and given that, for existing OEICs, pre-existing agreements need to be made PCC compliant, ACDs will need to have a process in place for:identifying which agreements are affected;reviewing those agreements for any inconsistency; andwhere there is inconsistency, taking the necessary action to resolve this by either amending or terminating those agreements.Identifying relevant agreementsAgreements entered into directly by the OEIC will fall within the ambit of agreements which need to be reviewed.  These will include the ACD Agreement, Depositary Agreement, ISDAs and stocklending agreements.For agreements entered into by the ACD and its agents, including the investment manager, on behalf of the OEIC (i.e. as an authorised agent and in a manner which binds the OEIC as principal), the ACD needs to be satisfied that such agreements are not inconsistent with the segregated liability provisions of the Regulations.  This potentially brings a wide range of agreements into the ambit of review such as brokerage terms and some distribution agreements.  It also creates a potential need to ensure that the OEIC does not delegate authority to a third party via the ACD to conclude agreements which bind the OEIC which are non-PCC compliant.  This is, therefore, something which should be provided for in existing ACD agreements.Review of relevant agreements and necessary corrective stepsWhere a term of an agreement is inconsistent with the segregated liability provisions action needs to be taken.  It has commonly been the case, for instance in ISDAs, that recourse has been limited to a specific sub-fund and therefore cross-liability risk did not arise as a matter of contract.  Such provisions will likely be consistent and therefore that practice can be expected to continue. Aside from where the parties have drafted in limited recourse terms in respect of a sub-fund, liability provisions in other agreements may not be so straightforward to assess.Where a provision is non-PCC compliant, the appropriate first step will be to seek to have it amended.  It remains to be seen how this will work in practice and for instance broker terms may well need to have limited recourse language inserted.  The alternative, where agreement cannot be reached, will be termination and this itself may prove problematic if a unilateral termination cannot be achieved without giving rise to liabilities (especially where any offending provision is in any event unenforceable as a matter of law for an English law governed contract).This aspect of the process will likely prove to be the most challenging at least from a logistical perspective, as the hope must be that counterparties will be sensible given that umbrella OEICs must comply.  The process is therefore something which needs to be addressed sooner rather than later as part of a PCC conversion project.  For new OEICs and new contracts, it is of course a far more immediate issue.--------------------------------------------------------------------------------Foreign law contractsAs with all PCC legislation, an important question is whether the ring-fencing would be upheld by a court in another jurisdiction were such a court asked to review a dispute say between a UK fund and an offshore stocklending agent. Given that certainty in this regard is not possible, as the FSA recognises, this risk needs to be disclosed in the prospectus.For existing OEICs converting and providing the necessary certification regarding contracts and for OEICs entering into new contracts,  any foreign contracts must be PCC compliant.  Therefore, a review process will be required in respect of those contracts.  In practice, and in order to show that reasonable steps have been taken to ascertain that those contracts are compliant, foreign law advice (and possibly legal opinions) might be necessary to confirm that foreign law contracts are PCC compliant.  This may be applicable to enable the ACD to give the required contracts confirmation as part of the conversion process of an existing OEIC or in order to allow the ACD or an agent of the OEIC to conclude a new contract.Ongoing duty on ACD A new ongoing duty is imposed on ACDs under COLL 6.6.5A where foreign law contracts are entered into by (and again it is wise to assume that this will also include contracts entered into on behalf of) the OEIC.  The ACD must ensure that, where reasonable grounds exist to consider that a foreign law contract has become inconsistent with the segregation requirements of the Regulations, it promptly investigates whether there is any inconsistency and must, if there is, take appropriate steps to remedy that inconsistency.Appropriate provisions should be considered in negotiating such a contract to ensure that not only is it not inconsistent with the segregation requirements of the Regulations but also that there is a mechanism to either vary or terminate the contract where it becomes inconsistent due to a foreign law development. This does seem potentially onerous for the ACD.  This is quite apart from the point of entry obligation where the ACD would need to ensure consistency with the Regulations.  In order to meet the obligation, it seems that foreign law developments need to be kept under review.  If there was, for instance, a decision in a foreign court which meant that the contractual provisions providing for segregated liability were construed as unenforceable,  the ACD would need to be able to take corrective action in respect of affected agreements.The difficulties which could arise from this new duty and from any uncertainty around the recognition of segregated liability mean that, to mitigate that risk, contracts entered into by or on behalf of the OEIC should ideally always, where appropriate and possible, be made subject to the law and the exclusive jurisdiction of the Courts of England and Wales or Scotland as the case may be.--------------------------------------------------------------------------------Cross investment Regulation 11B allows sub-funds for the first time to cross invest in other sub–funds of the same OEIC, provided that the second sub–fund does not itself invest in other sub–funds in the same OEIC.This change may allow fund management houses to rationalise their ranges.  In some cases separate OEICs have been established to allow internal funds to cross invest and this obstacle has now been removed. This may have some advantages in terms of increased economies of scale where an umbrella with lots of sub–funds is created, but could create additional administrative burdens (for example, the production of more reports and accounts relating to the same accounting period).  In order for sub-funds of an existing OEIC to cross invest, the OEIC would first have to convert to protected cell status.In addition to the restriction on further cross investment within the umbrella, the following requirements will apply:The prospectus must clearly state that the property of an investing sub-fund can include units in another sub-fund within the same umbrella.The restrictions on double charging for investment in associated schemes apply so that where a sub-fund invests in or disposes of units in another sub-fund in the umbrella, the second sub-fund must pay the investing sub-fund any preliminary or redemption charge as relevant within 4 business days (though not any SDRT or dilution charge).The usual spread and concentration rules will apply depending on whether it is a UCITS or a NURS.The existing rules to prevent cascading investment in other schemes still apply i.e. the extent to which the sub-fund invested in may itself invest in other schemes.The  HM Treasury and FSA July 2009 joint consultation paper contained a draft COLL rule expressly prohibiting, in respect of that portion of the property of the investing sub-fund comprising units in the second sub-fund, any remuneration being paid to the fund manager or any associate over and above that due in relation to services provided to the second sub-fund.  This would have meant that no double dipping was to be permitted in respect of management charges, and this accords with the position in Luxembourg and Dublin.  However, the final COLL rules do not include this draft rule.  It appears that management charges can be charged (but may well be waived) in respect of cross invested property, meaning that investments in sub-funds within the same umbrella are treated in this respect the same as associated funds outside the umbrella.--------------------------------------------------------------------------------https://www.eversheds.com/uk/home/articles/index1.page?ArticleID=templatedata\Eversheds\articles\data\en\Financial_institutions\FIG_briefing_New_UK_protected_cell_regime_100112#page=1Eversheds Pamela Thompson, Julian Brown and Michaela Walker United Kingdom January 10 2012 Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1840 http://www.comsuregroup.com/news.asp#n17 FSA breaks mystery shopper promises - The Financial Services Authority (FSA) has not used mystery shoppers for at least 18 months, despite a promise from Hector Sants that the regulator would make more use of the tactic. A freedom of informaion request submitted by the BBC found no mystery shopping exercises had been carried out since March 2010.In 2010, FSA chief executive Sants, said he would step up mystery shopping exercises.Consumer groups said they found the news "surprising"."It is a little surprising that the FSA hasn't placed more of an emphasis on mystery shopping, which can be a useful tool in identifying consumer detriment," Sarah Brooks, director of financial services at Consumer Focus, told the BBC."We accept that mystery shopping may not provide the hard evidence needed for enforcement action. However, it can act like a canary in a mineshaft - an indicator of problems."An FSA spokesperson said: "Mystery shopping is just one way the FSA can spot poor practice in the market place. It remains a tactic that we will use in the right circumstances."Read more: http://www.ifaonline.co.uk/ifaonline/news/2137005/fsa-breaks-mystery-shopper-promises#ixzz1jEH0EexH   Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1841 http://www.comsuregroup.com/news.asp#n18 Financial crime rules - FSA Guide to Financial Crime outlines “good practice examples” of how not to fall foul of fraud. - According to the FSA, the guide is not a checklist of things that all firms must do or not do to reduce their financial crime risk, and should not be used as such by firms or the regulator’s supervisors.* The guide will be kept under review and will continue to update it to reflect the findings of future thematic reviews, enforcement actions and other FSA publications and to cover emerging risks and concerns.* A firm must have in place up-to-date policies and procedures appropriate to its business. These should be readily accessible, effective and understood by all relevant staff, according to the watchdog.* Firms must employ staff who possess the skills, knowledge and expertise to carry out their functions effectively. They should review employees’ competence and take appropriate action to ensure they remain competent for their role. Vetting and training should be appropriate to employees’ roles.* Senior management are told to actively engage in a firm’s approach to addressing financial crime risk. The level of seniority and degree of engagement that is appropriate will differ based on a variety of factors, including the management structure of the firm and the seriousness of the risk.* A firm’s efforts to combat financial crime should be subject to challenge.* It is good practice for firms to engage with relevant cross-industry efforts to combat fraud, according to the regulator. Firms were told to monitor transactions to spot potential money laundering. While the FSA stated it expected a global retail bank would carry out a large number of customer transactions and need to include automated systems in its processes if it is to monitor effectively, a small firm with low transaction volumes could do so manually.* Firms must put in place systems and controls to identify, assess, monitor and manage money laundering risk. These systems and controls must be comprehensive and proportionate to the nature, scale and complexity of a firm’s activities. Firms must regularly review their risk assessment to ensure it remains current.* Firms must identify their customers and, where applicable, their beneficial owners, and then verify their identities. Firms must also understand the purpose and intended nature of the customer’s relationship with the firm and collect information about the customer and, where relevant, beneficial owner. This should be sufficient to obtain a complete picture of the risk associated with the business relationship and provide a meaningful basis for subsequent monitoring.* A firm must conduct ongoing monitoring of its business relationships on a risk-sensitive basis. Ongoing monitoring means scrutinising transactions to ensure that they are consistent with what the firm knows about the customer, and taking steps to ensure that the firm’s knowledge about the business relationship remains current.* Firms must have a nominated officer. The nominated officer has a legal obligation to report any knowledge or suspicions of money laundering to the Serious Organised Crime Agency (SOCA) through a suspicious activity report, also known as a SAR.* Firms must keep copies or references to the evidence of the customer’s identity for five years after the business relationship ends; and transactional documents for five years from the completion of the transaction.* The FSA stated it expects a firm to consider the full implications of the breadth of fraud risks it faces, which may have wider effects on its reputation, its customers and the markets in which it operates.* The FSA expects firms to put in place systems and controls to minimise the risk that their operation and information assets might be exploited by thieves and fraudsters. Internal procedures such as IT controls and physical security measures should be designed to protect against unauthorised access to customer data.Go to original paper: http://www.fsa.gov.uk/pubs/policy/ps11_15.pdf http://www.ftadviser.com/2011/12/09/regulation/regulation-tracker/financial-crime-rules-OZpUEBklgL0YEFLK5MHedM/article-1.html Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1842 http://www.comsuregroup.com/news.asp#n19 Olympus sues execs over £1.1bn accounting fraud - Japan's Olympus is suing 19 former and current executives for £30m (Y3.61bn) in compensation as it struggles to recover from a long-running £1.1bn accounting scandal.Olympus filed legal papers on 8 January with the Tokyo district court and confirmed today that all board members subject to the lawsuit, including president Shuichi Takayama, would quit in March or April, clearing the way for a comprehensive management overhaul.The suit was initiated by Olympus’ audit committee, which acted in response to an outside investigative panel that had been commissioned by the company to determine responsibility for the 13-year fiasco that concealed losses from investors.The move will allow the executives “to complete passing on their roles to avoid any impact on business implementation”, but leaves the company in the unusual position of continuing with several directors it is suing for mismanagement.The news has resulted in Olympus’s share price closing up 20% today - about half the level before the scandal unfolded - fuelled by hopes that the lawsuit would lead to the eventual renewal of the board.According to Japanese media reports, the Tokyo Stock Exchange (TSE) is also leaning towards allowing Olympus to keep its listing, but the TSE has not yet made a final decision on the matter. The TSE is likely to keep Olympus listed under a "security on alert" designation for the time being.Former British boss of Olympus, Michael Woodford, is also filing a lawsuit against the company for unfair dismissal after his sacking in October when he raised questions about transactions relating to the false-accounting scandal.Last week Woodford abandoned a bid to return to lead Olympus after citing a lack of support from Japanese shareholders.Woodford has also said the only way to revitalise Olympus would be for all the directors to leave and be replaced by a new and blameless board. As it stands, three directors, who Woodford says are equally tainted, are to be exonerated.http://www.accountingweb.co.uk/article/olympus-sues-execs-over-%C2%A311bn-accounting-fraud/522983 Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1843 http://www.comsuregroup.com/news.asp#n20 The precarious business of providing a reference - Providing a reference for a departing or former employee can be a tricky task. Any negligent or deliberate errors could lead to compensation pay-outs and it is therefore crucial to strike the right balance.  If he or she was a model employee and is departing on good terms a positive reference is appropriate, although employers must be careful not to "over-egg" it. If the employee was substandard and the employer is keen to be shot of him or her, the author has an obligation not to mislead the person to whom he is providing the reference with an inappropriately positive one. An unfair or inaccurate reference written about any employee may lead to compensation awards by courts or tribunals.  The recent UK case of McKie v Swindon College [2011] (see below), has extended obligations beyond references to all information which is passed onto a prospective employer of a former employee. In a small business community like Jersey, where misinformation can quickly spread and cause damage to a person's reputation, it is essential that referees act with the utmost care.  Some selected case law on referencesIt is well established, following the House of Lords' decision in Spring v Guardian Assurance [1995], that an employer who provides a reference for a former employee is under a duty to take reasonable care in making the reference and will be liable to the employee in negligence if the reference is inaccurate and the employee suffers loss as a result.In the subsequent case of TSB Bank Plc v Harris [2000], a reference outlined complaints about the employee of which he was unaware. The prospective employer withdrew its offer of employment as a consequence. Harris then resigned from TSB and sued for damages, claiming that TSB had breached the implied contractual duty of mutual trust and confidence. The claim was upheld: it was not reasonable to provide details of complaints against the employee of which the employee was not aware. However, in Bartholomew v London Borough of Hackney [1999], the former employee had been subject to a disciplinary procedure for financial misconduct. This fact was stated in the reference. Even though the employee left before the conclusion of the procedure, in this case the reference was held to be factually accurate and fair.Similarly in Kidd v Axa Equity & Law Life Assurance Society PLC [2000], Kidd brought an action against Axa for damages for breach of duty in relation to the provision of a reference. In the reference Axa had referred to complaints received from investors. Those complaints had resulted in reviews of Kidd's work by LAUTRO, the relevant regulatory body. Additionally Axa had not answered a question about Kidd's trustworthiness. Kidd claimed that Axa was in breach of its duty of care to disclose fully all relevant matters by failing to state that the complaints had not been investigated. This resulted in Kidd, who had given in his notice to Axa after accepting an offer from a competitor subject to a reference, having this offer withdrawn. The Court held that Axa owed a duty to take reasonable care not to give misleading information about Kidd. The selective information Axa had provided could give rise to a false or mistaken inference in the mind of a reasonable recipient, with a detrimental impact on Kidd. However, Axa did not owe him a duty of care in contract or tort to provide him with a reference that was full and comprehensive; the extent of the duty contended for by Kidd would be impossible to define and would often act against the interests of employees. This was followed in Cox v Sun Alliance Life Ltd [2001] in which the court stated that provided a reference was accurate and fair, it was not necessary to report on all the material facts concerning an individual.McKie v Swindon CollegeIn the recent case of McKie v Swindon College [2011], the High Court held that an employer will also be liable to a former employee in tort for damages for negligent misstatement when communicating with a subsequent employer.In this case Mr McKie, an art historian, had previously worked at Swindon College (the "College") for a number of years. When he left his job in 2002 the claimant received an excellent reference from the College. Subsequently McKie began working at the University of Bath where his duties involved him liaising with and visiting the College.A few weeks after starting the new job, the new HR Director at the College emailed the University to say that McKie would no longer be allowed onto College premises because of "safeguarding concerns" in relation to its students and that there had been serious staff relationship problems during his time there. The Director added that McKie had left the College before any formal action could be taken. The email resulted in the claimant being dismissed by his new employer.  The judge presiding over the case was very critical of the College for the manner in which it dealt with this issue. In particular, the judge criticised its failure to carry out a proper investigation before sending an email to the University which he described as being "fallacious and untrue" and its preparation "sloppy and slapdash".Although this case did not involve a reference, the Court held that the College owed the claimant a duty of care in passing information about him to a subsequent employer. The claim succeeded because the damage sustained was foreseeable, the relationship was sufficiently proximate, the claim fair, just and reasonable and there was a causal connection between the negligent act in question (the sending of the email) and the damage claimed.Data protection and discriminationInformation in a reference will include "personal data" under the data protection laws of Jersey and Guernsey and information regarding an employee's sickness absence records or criminal convictions will constitute "sensitive personal data".  An employer should consider obtaining the consent of an individual prior to releasing information in a reference, particularly when sensitive personal data is to be disclosed.Whether or not a reference is disclosable in full to the employee in question varies, depending on whose hands the reference is in, and an employer should always assume that the individual may see the reference.  In addition, an employer must consider whether any statement made could be classified as discriminatory, for example, on grounds of sex or race. (As at the end of 2011, there is no anti-discrimination legislation in force in Jersey but it is expected to be introduced in coming years.) Avoid statements which turn on an individual's personal characteristics, save where truly relevant to the job.To provide or not to provide?Employers should be willing to provide factual references where asked to do so by a current or former employee, but without expressing purely personal opinions, save where they can be substantiated by evidence such as performance or disciplinary records.  Where the contract states that a reference will be provided on request there is likely to be a contractual obligation to provide one. Although normally there is no obligation on an employer to provide a reference, in Spring (see above) the Court held that in certain limited and specific circumstances there may be an implied contractual duty on an employer to provide one. In that case, the former employee worked as a sales director for a company that sold investment products. Under the rules of the regulatory body LAUTRO the new employer was required to seek and the outgoing employer to provide a reference, and the employee could not enter the particular type of employment sought without a reference. Here there was an implied contractual term that the employer would:"…provide a reference from a prospective employer which was based on facts revealed after making those reasonably careful inquiries which, in the circumstances, a reasonable employer would make."More recently in the case of Byrnell v British Telecommunications PLC [2009], the Court reiterated that there is no obligation or general duty on an employer to provide a reference, except for those industries under a regulatory scheme like LAUTRO. Further the Court stated that short form references or "certificates of employment" that merely provide specific details such as dates of employment etc. are still to be regarded as references. Providing such a certificate, which is increasingly common, is not to be regarded as prejudicial due to any adverse inference that might arise.Financial Services Commission requirementsFinally, although in the UK, employers covered by the Financial Services Act 1986 may be required to provide a reference there is no equivalent obligation on employers in Jersey or Guernsey. In relation to joiners and leavers, however, it should be noted that the Jersey Financial Services Commission (JFSC) and Guernsey Financial Services Commission (GFSC) do require companies in sectors such as insurance, banking and investment to obtain the consent of or notify JFSC/GFSC regarding key staff changes. In addition, some staff in such companies may be required to complete and return Personal Questionnaires, which ask for details of experience, qualifications and regulatory and criminal background. More information can be found at www.jerseyfsc.org and www.gfsc.gg.ConclusionWhen asked to provide a reference remember that:Information you give should be true, fair, accurate and capable of objective confirmation.It is always safer to provide factual information (for example, job title and length of service) than subjective views on employee performance.The employee may have access to the reference.Following McKie any additional information provided to a future employer must also be carefully considered.http://www.bedellgroup.com/siteFiles/resources/docs/insights/Breifings/Employment%20-%20Jersey%20Briefings/ThePrecariousBusinessofProvidingaReference.pdf#page=156163165Bedell Cristin Vicky Milner and Guy Le Sueur United Kingdom   Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1845 http://www.comsuregroup.com/news.asp#n21 Think you own your LinkedIn, Twitter and Facebook account? Think again - You may not, as reflected in the recently reported decision of Eagle v. Morgan, 2011 WL 6739448 (E.D. Pa. December 22, 2011) where both the employee and her former employer claim ownership in the employee’s LinkedIn account, the popular social networking site for business professionals. The dispute is starkly drawn in the litigation’s opposing pleadings and provides a strong warning to the hundred million plus LinkedIn users and other users of social media who operate under the assumption that their social media accounts belong solely to them to transfer as they please when they change jobs.    The facts in the Eagle case will sound familiar to all social media mavens who use sites like LinkedIn to promote their businesses and professional careers. The plaintiff Linda Eagle, a Ph.D. in communications and psychology, established her LinkedIn account in 2008 after she and others founded Edcomm, Inc., (“Edcomm”) to train individuals to work in the financial services industry. Like others who sign up for a free account with LinkedIn, Dr. Eagle’s complaint alleges she had to assent to a user agreement “which constitutes “a legally binding agreement with LinkedIn Corporation” and, as such, “information provided to LinkedIn is owned by the LinkedIn user, subject to the other terms of the User Agreement.” Id. at *1.According to LinkedIn’s terms of use, “[u]sers can maintain only one LinkedIn account at a time” and “Dr. Eagle [as alleged in her complaint] used her account to promote Edcomm’s banking education services; foster her reputation as a businesswoman; reconnect with family, friends, and colleagues; and build social and professional relationships.” Id.In October 2010 Sawabeh Information Services Company (“SISCOM”) purchased Edcomm. Dr. Eagle initially remained employed by SISCOM as its CEO, but approximately 6 months later Edcomm involuntarily terminated her employment. According to Dr. Eagle’s complaint, Edcomm then hijacked her LinkedIn account using her LinkedIn password. Her complaint alleges that Edcomm used her password “to gain unauthorized access” to her account, “changed the password,” and “then changed Dr. Eagle’s account profile to display” Edcomm’s new CEO’s “name and photograph” “but Dr. Eagle’s honors and awards, recommendations and connections.” Id. at *2. The complaint alleges that Edcomm “used Dr. Eagle’s account both to prevent her connections from reaching her, and to acquire business connections for the benefit of . . . [the new CEO] and Edcomm. Id.In response Edcomm filed a counterclaim alleging facts that Dr. Eagle’s LinkedIn account had been established and used for the benefit of Edcomm at Edcomm’s expense. Thus, the counterclaim alleges “that Edcomm, while under Dr. Eagle’s management, implemented a policy requiring Edcomm’s employees to create and maintain LinkedIn accounts.” Id at 3. All Edomm executive employees, as a matter of company policy, were required “to: (a) utilize their Edcomm email address for LinkedIn accounts; (b) utilize a specific form template, created and approved by Edcomm, for their description of Edcomm, work history, and professional activities, as well as photographs taken by a professional photographer hired by Edcomm; (c) contain links to Edcomm’s website on LinkedIn accounts and the Banker’s Academy webpage, as well as Edcomm’s telephone number; and (d) utilize Edcomm’s template for replying to individuals through LinkedIn.” Id. The counterclaim further alleges that “[c]ertain Edcomm employees monitored these LinkedIn accounts, corrected any violations of Edcomm policy, and maintained accounts for several employees for the benefit of Edcomm” and that “all discussions, connections, and content were added by” Edcomm employees.” IdIn short, Edcomm alleges that “Dr. Eagle’s LinkedIn account was used for Edcomm business and Edcomm personnel developed and maintained all connections and much of the content on her account” and that Dr. Eagle, who regained control of her LinkedIn account after initiating her lawsuit, had “wrongfully misappropriated both Edcomm’s connections on the LinkedIn account and Edcomm’s telephone number constituting Edcomm’s proprietary information on the account.” Id.Based on these dueling allegations both sides filed numerous claims against each other. Dr. Eagle alleges violations of the Computer Fraud and Abuse Act (“CFAA”), Title 18, U.S.C. §1030, violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), unauthorized use of name in violation of 42 Pa.C.S. § 8316, invasion of privacy by misappropriation of identity, misappropriation of publicity, identity theft under 42 Pa.S.C. § 8315, conversion, tortious interference with contract, civil conspiracy and civil aiding and abetting. Id. at. *2. Edcomm also alleges violations of the CFAA, misappropriation, conversion, tortious interference with contract but added claims for unfair competition and a violation of the Pennsylvania trade secret law.Dr. Eagle moved to dismiss all of Edcomm’s claims on the ground that they do not, as a matter of law, allege facts constituting proper claims for relief. The court granted Dr. Eagle’s motion to dismiss all of Edcomm’s claims except for two Pennsylvania law causes of action,1) misappropriation of an idea and 2) unfair competition that is essentially based on the same elements of the misappropriation claim. Under Pennsylvania law misappropriation of an idea requires the plaintiff to prove that 1) the plaintiff had an idea that was novel and concrete and 2) the idea was misappropriated by the defendant. Id. at *13. As the court explained,[t]o determine whether an idea has been misappropriated, Pennsylvania courts look to the three elements of common law misappropriation:(1) the plaintiff “has made substantial investment of time, effort, and money into creating the thing misappropriated such that the court can characterize the ‘thing’ as a kind of property right,” (2) the defendant “has appropriated the ‘thing’ at little or no cost such that the court can characterize the defendant’s actions as ‘reaping where it has not sown,’ “ and (3) the defendant “has injured the plaintiff by the misappropriation.”Id.In refusing to dismiss the misappropriation and unfair competition counts the court relied on the allegations in Edcomm’s counterclaim that “Edcomm personnel, not Dr. Eagle, developed and maintained all connections and much of the content on the LinkedIn Account, actions that were taken solely at Edcomm’s expense and exclusively for its own benefit.” Id. The court stated, ‘[w]hile Plaintiff argues that Edcomm fails to allege facts that would show that it made a substantial investment of time, effort, and money into creating the cell phone number or LinkedIn account, Edcomm counters that its employees developed the accounts and maintained the connections, which are the route through which Edcomm contacts instructors and specific personnel within its clients.” Thus, the court held that “these conflicting allegations create an issue of fact requiring further discovery.” Id.With businesses like Edcomm actively encouraging their employees to use social media as a marketing tool, there can be little doubt that litigation over the ownership of social media accounts is likely to increase. Just last July PhoneDog.com, a popular mobile phone site, sued in federal district court in California a former employee who had amassed approximately 17,000 followers on Twitter claiming that the followers constituted a company-owned customer list entitling it to $2.50 per month per follower or $350,000 in total damages. The only way to avoid the inevitable lawsuits over the ownership of these accounts is for both employers and employees to be proactive in establishing ownership rights prior to using individual social media accounts as a marketing tool.From the employer’s standpoint this ownership issue is a prime reason why employers should adopt social media policies clarifying who owns the social media accounts and ownership rights when the employment relationship is terminated. For example, it may make sense to allow employees using LinkedIn to keep their accounts but cleanse them of information that belongs to the employer because of the employer’s financial investment in the site and to ensure the employee is no longer associated as a spokesperson for his former employer. As a strategy to minimize, and perhaps avoid litigation altogether, an agreement between the employer and employee delineating the post employment rights of both the employee and employer to the account would seem the most efficient way to deal with this issue.http://computerfraud.us/articles/think-you-own-your-linkedin-twitter-and-facebook-account-think-again#page=1Dorsey & Whitney LLP Nick Akerman USA January 3 2012 Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1846 http://www.comsuregroup.com/news.asp#n22 Seven steps to SARs success - Part VII of the Proceeds of Crime Act 2002 (POCA) imposes a reporting regime which is complex and, at times, confusing. Failure to comply may amount to a criminal offence. Solicitors trying to decipher the different disclosure obligations set out in Part VII may find it useful to remember the following:1. Are the required elements to make a report present? There are certain elements which must be present before you have a duty to make a SAR. Do you know or suspect, or are there reasonable grounds for suspecting, that a person is engaged in money laundering (as prohibited by sections 327, 328 or 329 of Part VII - see point 4 below for further details) or in activities which would be money laundering if they occurred in the UK, or in a conspiracy or incitement to commit such an act, or in aiding, abetting, counselling or procuring such an act? If so, can you identify such a person?; or do you know the whereabouts of the criminal proceeds?; or do you have information that will or may assist in identifying such a person or the criminal proceeds? If you answer no to all these three questions (a) to (c) you do not have a duty to make a report.2. Where did the criminal activity giving rise to the alleged criminal property take place? If the acts took place wholly outside the UK, consider whether the overseas exemption might apply. Remember that conduct that is criminal in the country in which it was committed but would not be criminal in the UK is not "criminal conduct" for the purposes of POCA.3. How did you obtain the information? Did the information on which your knowledge or suspicion is based come to you ’during the course of a business in the regulated sector’? As a solicitor much of your work may be ‘business in the regulated sector’ although certain practice areas, including dispute resolution, fall outside the regulated sector. Did the information come to you in ’privileged circumstances’? If so, there is no obligation for you to make a report. However, if you are advising clients in the regulated sector on their own reporting obligations, remember that in most cases the privileged circumstances defence will not apply to them, so they may have a reporting obligation under POCA.4. Do you need to get appropriate consent? In cases where you suspect the presence of criminal property, do you intend to deal with or advise or be concerned in arrangements in respect of it (or property which in whole or in part represents it) in any way? If so, you may be at risk of committing an offence under sections 327, 328 and 329 of Part VII which prohibit the acquisition, possession, use of criminal property as well as the concealing, disguising and transferring of it or the entering into or becoming concerned in arrangements which you suspect may facilitate money laundering by another. As a general rule, solicitors acting on matters involving criminal property should seek consent in advance to carry out the prohibited act save in the limited circumstances where Bowman v Fels applies. Although the requirement to obtain consent is separate from the obligation to report suspicions of money laundering, in practice a single report containing a request for consent may be filed.5. Try to be as accurate as possible while remaining succinct.  When reporting, provide all essential detail but avoid the temptation to clutter your report with extraneous information. SOCA needs to know the nub of the matter without getting submerged in superflous detail (SOCA can always ask for further information if they need it). Extensive knowledge of the predicate offence is not required but a reporter should be able to state the reasons for his or her suspicion, name the relevant person suspected of money laundering and/or point to the whereabouts of the proceeds of crime or give information that may enable the enforcement agencies to do so. Make it clear on the face of the report if you are seeking consent to deal in criminal property - and draft your request carefully to cover all the activities you are proposing to carry out. 6. SARs should not be used as a means of establishing whether or not you can take on a client or even act on a particular matter. SOCA is not an integrity check provider. Where you have reasons to be concerned about the integrity of your clients or the probity of the matter you are acting on you should conduct your own checks (and are required to do so under the Money Laundering Regulations 2007). Routine requests to your clients for information about themselves or the source of their funds will not generally amount to a ’tipping off’ offence. 7. Obtaining consent from SOCA will only protect you, by way of a defence, from committing a money laundering offence under Part VII POCA. It will not protect you from committing or facilitation of any other criminal offence.http://www.lawsociety.org.uk/newsandevents/news/view=newsarticle.law?NEWSID=444867 Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1847 http://www.comsuregroup.com/news.asp#n23 Why dirty money is still a matrimonial issue - When it comes to matrimonial lawyers and anti-money laundering, the mantra for many years has been: 'the case of Bowman v Fels means I don’t have to worry about any of this and anyway, talking with my client about such issues would be tipping off'. However a closer inspection of the legislation, the case law and a lawyer's ethical obligations to their clients shows that this approach is not justified and is exposing matrimonial lawyers to significant risks. The scenarioMost matrimonial lawyers will be able to point to at least one client where allegations of tax evasion or the existence of other criminal property were made. For the purposes of this article we will consider allegations of tax evasion, although the principles would be the same for any other criminal property. Leaving aside the initial question of whether these allegations are fabricated to try to inflict damage on the other party, you need to understand your position as the lawyer and your client's position with respect to both the criminal law and civil law.Is anyone money laundering?The first question to ask yourself is: Do I know or suspect that there is existing criminal property involved with this retainer? In this scenario the answer, subject to a few questions of the client about the basis for their allegation, is yes. You have information that a person has evaded tax, which is a crime and that they have saved money as a result of that crime. Further, potentially all of the matrimonial assets are now 'tainted' due to indirect benefits from this criminal activity. The next question to ask is: Is anyone currently in possession of criminal property and so money laundering? Whoever has possession of that criminal property now, with the knowledge or suspicion that they have not paid tax, will be money laundering under section 329 of the Proceeds of Crime Act. Anyone who has possession of the criminal property after the divorce, with the requisite knowledge or suspicion, will also be money laundering. Marriage is not adequate consideration for criminal property, either while the marriage is in existence or after it is dissolved. This means that those individuals (either your client or their spouse) will need to make an authorised disclosure and get consent to possess this criminal property, as this is the only other relevant defence to such a money laundering charge. (While there is an defence of reasonable excuse for failing to make an authorised disclosure, the argument that you were avoiding self-incrimination is unlikely to have much success given the overall purpose of the legislation.)But what about Bowman v Fels I hear you say, that means none of this matters – right? The case of Bowman v Fels held that litigation itself (or the negotiated, mediated or arbitrated settlement of such a dispute) is not entering into an arrangement. This means that the lawyer can be assured that they are not committing a criminal offence of money laundering under section 328 of POCA by helping the client end their marriage and sort out their affairs according to law. It also means that the client is not subject to extra criminal sanctions simply as a result of seeking the divorce. The case also provided that privilege is not overridden by the provisions in Part 7 of POCA. This means that you will have to consider how you received the information and whether the crime/fraud exemption applies before you, as the lawyer, consider any reporting obligations that you have under section 332 of POCA (the failure to report in the unregulated sector offence). It is important to consider whether it really is the money laundering laws that have made this so complicated or whether matrimonial lawyers had obligations in this area before POCA. A matrimonial client was only ever entitled to their share of the legitimate assets of the marriage. The assets obtained illegitimately were only ever held on trust for the victim of the crime and were always open to recovery by law enforcement agencies. The client always needed legal advice on this issue so that they fully understood their legal position and could obtain the best possible settlement in all of the circumstances. The practical consequencesTalk to your client about the allegations. Ask about the basis for the allegations and help them to understand the seriousness of the consequences, not only for their former spouse but also for themselves. Explain the need to resolve outstanding tax obligations with the relevant authorities and the risk that if they do not law enforcement agencies will be able to claim it back from them at a later date. If they are currently in possession of the criminal property, explain their need to obtain consent so that they are not charged with money laundering. Such an application for consent need not delay the litigation. You are only prevented from doing a prohibited act while you are awaiting consent and litigation is not a prohibited act. You can also discuss the allegations and their resolution with the other side. You should consider incorporating any agreement for payment of outstanding tax within the settlement so that it is clear where the obligations lie. If the client does not agree to make full disclosure to the relevant authorities you should consider whether it is ethically appropriate for you to continue in the retainer.Irrespective of whether the client is willing to make full disclosure or not, you need to consider your own obligations under section 332 of POCA. As stated above, you will need to consider whether privilege applies so as to remove your obligation to disclose. While litigation privilege is wide, not every piece of information received during litigation is privileged. But what about tipping off?Since December 2007 litigation lawyers have not had to worry about tipping off. Section 333A of POCA specifically provides that the prohibition on disclosure only relates to situations where the information on which the SAR was based came to the person’s knowledge in the course of business in the regulated sector. Matrimonial and other litigation is business outside the regulated sector and so this key element of the offence cannot be satisfied. Section 342 of POCA still contains the prejudicing an investigation but this specifically excludes from the offence the making of a disclosure where you are a legal professional adviser and you are giving legal advice to your client or are involved in legal proceedings. As always, your ethical obligation in the giving of the advice is to encourage your client to comply with the law, rather than telling them how to breach it. Longer term consequences of not taking actionAdvising clients in matrimonial disputes is quite often challenging, with tensions and emotions running high. It is not surprising that many matrimonial lawyers may not relish the idea of having to explain to the client that: 'the little bit of tax evasion that you think shouldn’t really matter because everyone does it, actually makes you a money launderer and you need to sort it out with the authorities'. It may even be tempting to consider whether it is possible to let the allegations slide on the basis that the client can ultimately deal with it should anyone ever find out. The client themselves may even pose such a course of action in response to your advice on the issue.However with increased intelligence sharing and data matching between HMRC, DWP and financial institutions, the chances of tax evasion being discovered by the authorities is increasing all the time. If you do not have the discussion with the client and in due course the authorities seek to recover assets from them, you may find that the client is in a position to sue you for negligence as you failed to give them full advice and act in their best interests. Should you agree with the client to ignore their criminal activity and it is discovered in due course, the authorities may make a referral to the SRA and you could find yourself subject to a disciplinary charge for failing to uphold the rule of law and bringing the profession into disrepute. So in short, it is in your best interests and your client's best interests to deal promptly and fully with allegations of criminal conduct and criminal proceeds in matrimonial matters, rather than turning a blind eyehttp://www.lawsociety.org.uk/newsandevents/news/view=newsarticle.law?NEWSID=444868 Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1848 http://www.comsuregroup.com/news.asp#n24 Why dirty money is still a matrimonial issue - When it comes to matrimonial lawyers and anti-money laundering, the mantra for many years has been: 'the case of Bowman v Fels means I don’t have to worry about any of this and anyway, talking with my client about such issues would be tipping off'. However a closer inspection of the legislation, the case law and a lawyer's ethical obligations to their clients shows that this approach is not justified and is exposing matrimonial lawyers to significant risks. The scenarioMost matrimonial lawyers will be able to point to at least one client where allegations of tax evasion or the existence of other criminal property were made. For the purposes of this article we will consider allegations of tax evasion, although the principles would be the same for any other criminal property. Leaving aside the initial question of whether these allegations are fabricated to try to inflict damage on the other party, you need to understand your position as the lawyer and your client's position with respect to both the criminal law and civil law.Is anyone money laundering?The first question to ask yourself is: Do I know or suspect that there is existing criminal property involved with this retainer? In this scenario the answer, subject to a few questions of the client about the basis for their allegation, is yes. You have information that a person has evaded tax, which is a crime and that they have saved money as a result of that crime. Further, potentially all of the matrimonial assets are now 'tainted' due to indirect benefits from this criminal activity. The next question to ask is: Is anyone currently in possession of criminal property and so money laundering? Whoever has possession of that criminal property now, with the knowledge or suspicion that they have not paid tax, will be money laundering under section 329 of the Proceeds of Crime Act. Anyone who has possession of the criminal property after the divorce, with the requisite knowledge or suspicion, will also be money laundering. Marriage is not adequate consideration for criminal property, either while the marriage is in existence or after it is dissolved. This means that those individuals (either your client or their spouse) will need to make an authorised disclosure and get consent to possess this criminal property, as this is the only other relevant defence to such a money laundering charge. (While there is an defence of reasonable excuse for failing to make an authorised disclosure, the argument that you were avoiding self-incrimination is unlikely to have much success given the overall purpose of the legislation.)But what about Bowman v Fels I hear you say, that means none of this matters – right? The case of Bowman v Fels held that litigation itself (or the negotiated, mediated or arbitrated settlement of such a dispute) is not entering into an arrangement. This means that the lawyer can be assured that they are not committing a criminal offence of money laundering under section 328 of POCA by helping the client end their marriage and sort out their affairs according to law. It also means that the client is not subject to extra criminal sanctions simply as a result of seeking the divorce. The case also provided that privilege is not overridden by the provisions in Part 7 of POCA. This means that you will have to consider how you received the information and whether the crime/fraud exemption applies before you, as the lawyer, consider any reporting obligations that you have under section 332 of POCA (the failure to report in the unregulated sector offence). It is important to consider whether it really is the money laundering laws that have made this so complicated or whether matrimonial lawyers had obligations in this area before POCA. A matrimonial client was only ever entitled to their share of the legitimate assets of the marriage. The assets obtained illegitimately were only ever held on trust for the victim of the crime and were always open to recovery by law enforcement agencies. The client always needed legal advice on this issue so that they fully understood their legal position and could obtain the best possible settlement in all of the circumstances. The practical consequencesTalk to your client about the allegations. Ask about the basis for the allegations and help them to understand the seriousness of the consequences, not only for their former spouse but also for themselves. Explain the need to resolve outstanding tax obligations with the relevant authorities and the risk that if they do not law enforcement agencies will be able to claim it back from them at a later date. If they are currently in possession of the criminal property, explain their need to obtain consent so that they are not charged with money laundering. Such an application for consent need not delay the litigation. You are only prevented from doing a prohibited act while you are awaiting consent and litigation is not a prohibited act. You can also discuss the allegations and their resolution with the other side. You should consider incorporating any agreement for payment of outstanding tax within the settlement so that it is clear where the obligations lie. If the client does not agree to make full disclosure to the relevant authorities you should consider whether it is ethically appropriate for you to continue in the retainer.Irrespective of whether the client is willing to make full disclosure or not, you need to consider your own obligations under section 332 of POCA. As stated above, you will need to consider whether privilege applies so as to remove your obligation to disclose. While litigation privilege is wide, not every piece of information received during litigation is privileged. But what about tipping off?Since December 2007 litigation lawyers have not had to worry about tipping off. Section 333A of POCA specifically provides that the prohibition on disclosure only relates to situations where the information on which the SAR was based came to the person’s knowledge in the course of business in the regulated sector. Matrimonial and other litigation is business outside the regulated sector and so this key element of the offence cannot be satisfied. Section 342 of POCA still contains the prejudicing an investigation but this specifically excludes from the offence the making of a disclosure where you are a legal professional adviser and you are giving legal advice to your client or are involved in legal proceedings. As always, your ethical obligation in the giving of the advice is to encourage your client to comply with the law, rather than telling them how to breach it. Longer term consequences of not taking actionAdvising clients in matrimonial disputes is quite often challenging, with tensions and emotions running high. It is not surprising that many matrimonial lawyers may not relish the idea of having to explain to the client that: 'the little bit of tax evasion that you think shouldn’t really matter because everyone does it, actually makes you a money launderer and you need to sort it out with the authorities'. It may even be tempting to consider whether it is possible to let the allegations slide on the basis that the client can ultimately deal with it should anyone ever find out. The client themselves may even pose such a course of action in response to your advice on the issue.However with increased intelligence sharing and data matching between HMRC, DWP and financial institutions, the chances of tax evasion being discovered by the authorities is increasing all the time. If you do not have the discussion with the client and in due course the authorities seek to recover assets from them, you may find that the client is in a position to sue you for negligence as you failed to give them full advice and act in their best interests. Should you agree with the client to ignore their criminal activity and it is discovered in due course, the authorities may make a referral to the SRA and you could find yourself subject to a disciplinary charge for failing to uphold the rule of law and bringing the profession into disrepute. So in short, it is in your best interests and your client's best interests to deal promptly and fully with allegations of criminal conduct and criminal proceeds in matrimonial matters, rather than turning a blind eyehttp://www.lawsociety.org.uk/newsandevents/news/view=newsarticle.law?NEWSID=444868 Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1850 http://www.comsuregroup.com/news.asp#n25 JFSC employee, responsibility and structure reorganisation - Mark Sumner is now head of investments as well as insurance and banking Nick Troy (AML team) now sits under Mark Sumner. Andrew Le Brun is now DG's office - similar to GFSC (Richard Walker) The Securities team looks unchanged other than Comsure being told Mike Jones is now on AIFM full time Debbie Sebire head of Supervisory Operations as well as TCB  David Oliver is the only TCB deputy director alongside Eric DolanEric Dolan is also shown as deputy on Supervisory operationshttp://www.jerseyfsc.org/the_commission/about_us/structure/index.asp#  Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1852 http://www.comsuregroup.com/news.asp#n26 Comsure can help with Employment and Health & Safety Law - read more belowHR - Employment Law - Our Employment Law Services Help You to Stay One Step Ahead. - www.peninsula-je.com/digital-brochure/Our Employment Law services currently allow employers in the Channel Islands to focus on the success and growth of their business rather than worrying how about how to deal with a difficult employee or what they should do when facing a Tribunal claim. Expertise is on hand to assist with any employment matter no matter how trivial through our 24 Hour Advice Service which is available 365 days a year.If your business does face an Employment Tribunal claim then be assured that a Legal Services team will provide a full Employment Tribunal representation service aimed at achieving the best outcome for your business. In addition, an indemnity scheme can fund the cost of any awards made against your business giving you further peace of mind. We will also ensure you have legally compliant employment documentation in place to prevent you from getting into difficulty in the first place.HS - Health & Safety - Total Protection for You and Your Business. - www.peninsula-je.com/digital-brochure/Our Health & Safety services help you to better understand and manage your obligations and provide the knowledge and systems to allow you to be one step ahead. With the availability of our 24 Hour Health & Safety Advice Service all your business queries – be it a routine enquiry or an urgent problem – can be answered. This essential service supports the bespoke Health & Safety management systems which we will create and help you to implement ensuring you operate a safe and legally compliant workplace.Additionally, our Health & Safety training courses are available allowing you to further develop your understanding and knowledge; And, should the worst happen and legal proceedings be brought against you or your organisation, we will be able to provide robust legal representation and indemnity against the costs, providing total peace of mind.READ THE BROCHUREwww.peninsula-je.com/digital-brochure/ Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1849 http://www.comsuregroup.com/news.asp#n27 Help! I'm a new MLRO - So you come back from holiday to find you have been elected the money laundering reporting officer (MLRO). You ask yourself a number of questions, the main one being ‘how do I persuade my board and senior partners that this Proceeds of Crime Act is serious?’Not an easy challenge.Make sure that you know your subject, read the Law Society’s Anti-money laundering practice note and attend the MLRO training. You need to be confident that you can explain that money laundering includes transferring the savings from not paying tax or from committing an environmental offence. A thorough understanding of the law will enable you to explain how serious this legislation is.Apply that knowledge to your firm by doing your risk assessment, ie ‘know your business’ and be clear about your real areas of risk. If you do conveyancing, expect to spend more time with that team on ID issues, source of funds etc. Criminal defence work is less likely to require your input. If your Court of Protection team acts for clients transferred from the Personal Injury team you will know about the source of funds. Talk to the partners in the higher risk areas to work together to mitigate the risks and ensure that staff are properly trained about the real risks they might face. Case studies about other lawyers in the same practice area will focus the mind. Combining your expertise with their practical knowledge pays dividends. You need to have the systems in place to ensure that ID is obtained but you also need to ensure that people understand how draconian the law is and that they must ask for your help. The measure of a successful MLRO is not how many reports to the Serious Organised Crime Agency they make but how many sensible queries they receive. Fri, 13 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1834 http://www.comsuregroup.com/news.asp#n28 FSA charges man for insider dealing - the FSA has charged Richard Anthony Joseph, with eight counts of insider dealing and two counts of money laundering at City of London Magistrates’ Court.According to a statement from the FSA, Mr Joseph, who is 42 years of age, attended the court today (11th January), was sent for trial and will next appear at Southwark Crown Court on 6 March 2012.The FSA statement said he is on conditional bail. The charges follow on from the arrest of Mr Joseph on 19 May 2010.Insider dealing is a criminal offence that is punishable by a fine or up to seven years imprisonment.http://www.ftadviser.com/2012/01/11/regulation/regulators/fsa-charges-man-for-insider-dealing-q1CbpkyUGuIwZPEVuK9VrL/article.html Wed, 11 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1835 http://www.comsuregroup.com/news.asp#n29 Businessman jailed over £18m fraud - A businessman has been jailed for 18 months for his part in a €22m (£18m) fraud, while two others will be sentenced later this month.Mark Pattinson, 38, of Lancashire, was sentenced at Southwark Crown Court on Monday 9 January after he had pleaded guilty to conspiracy to use false instruments and conspiracy to commit fraud by false representation.Another businessman, Michael Shephard, 50, of Lancashire who also pleaded guilty, and Kevin Steele, 51, of Kent, a former partner for law firm Mishcon de Reya who was found guilty after a trial in December, had their sentencing adjourned until 27 January.The pair’s sentencing was delayed after the court was told Steele had a heart condition and a pre-sentencing report had not been compiled. Judge Graham Wood ruled that both should be sentenced together.Jurors were told during the trial that between 8 May and 22 August 2008, all three conspired together, to use false letters purporting to originate from Julius Baer & Co bank.This paperwork, the court heard, was used to dupe EFG Private Bank to believe Shephard had £76.4m held in two Julius Baer & Co accounts. This was then used as security for a €22m loan from EFG Private Bank.Steele used his position at Mischon de Reya to support Shephard’s financial interests, the court heard.Sentencing Pattinson, Judge Wood said the defendant must serve at least half the sentence in jail, but said he was confident he would not reoffend.The case was accepted by the Serious Fraud Office for investigation in November 2008 and was conducted in partnership with Warwickshire Police.http://www.ftadviser.com/2012/01/10/regulation/regulators/businessman-jailed-over-m-fraud-Gnc35M4zQfDcyaS7yKRVOI/article.html Wed, 11 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1836 http://www.comsuregroup.com/news.asp#n30 HMRC: Admit tax fraud or face criminal investigation - Taxpayers suspected of fraud by HMRC will be able to avoid criminal investigations if they admit to their actions, under a new initiative. Under the new Contractual Disclosure Facility, HMRC will contact a taxpayer to inform them that they are suspected of serious tax fraud, offering them the opportunity to enter a contract giving them 60 days in which to disclose their fraud, in return for which HMRC will agree not to criminally investigate them.However, they will still be investigated using civil powers, with a view to a civil settlement for tax, interest and a financial penalty.Government set for £9bn offshore tax boost Meanwhile, taxpayers who do not sign up to the contract could potentially be criminally investigated, with a view to prosecution, and the same will apply to anyone who reneges on the contract.David Gauke, Exchequer Secretary to the Treasury, said: "This new facility is a valuable tool which will help HMRC in its fight against fraud."HMRC will set out clearly what is expected of taxpayers, and what will happen to fraudsters who choose not to disclose their crimes."The new arrangements will not apply to any taxpayers who want to admit to fraud but who are not already under investigation.Read more: http://www.ifaonline.co.uk/ifaonline/news/2136830/hmrc-admit-tax-fraud-criminal-investigation#ixzz1jAaTuqBo   Wed, 11 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1837 http://www.comsuregroup.com/news.asp#n31 What to expect from the FSA's small firms review - It's a call some advisers might be dreading and, for many firms, it could compound the challenges they already face in 2012. Over the coming weeks and months, the FSA will be contacting a select group of 'small' firms - those, according to the FSA Handbook, with 25 or fewer advisers - to inform them they are to undergo a regulatory review, concentrating on the risks they face and the processes they have in place to counter them.The reviews will follow a series of ‘Business Risk Awareness Workshops' the FSA has already begun hosting across the country, where the regulator has been telling advisers what to expect and how to prepare.Kevin Morgan, managing director of Consilium Financial Planning, said he expects the tone of the reviews to follow those of the FSA's treating customers fairly (TCF) projects."The FSA is looking to make sure everything is ship-shape before the Financial Conduct Authority takes over," he said. "I've got no problem with it and we're busy getting ourselves ready for the brave new world in 2013."Compliance experts have also been briefed and, according to SIFA, the governance element of the regulator's reviews will cover accountability, management process, decision making and oversight, with the culture element covering behaviours, motivation and communication.When assessing controls, SIFA believes the FSA will be looking for evidence of training and competence, management information and supervision.The reviews will take the form of either a face-to-face or telephone interview, or an online or paper-based assessment, and will be compulsory for anyone asked to do them.While he broadly welcomed the regulator's initiative, Simplybiz managing director Matthew Timmins warned advisers of the FSA's interest in their investment processes."One of the big areas of focus will still be investment suitability and whether the output of the advice matches with the clients' attitude to risk," he said."Are they in a suitable vehicle? Have the advisers followed a proper process? Is it consistent across the business?"Firms found to have significant risks may have to undergo further supervisory work after the review, with more detailed discussions about the problems and the actions the FSA expect them to take.Perhaps the most rigorous element will come with the FSA's verification work, when it will go into greater depth with a random sample of firms, looking into customer files and processes and procedures.Even though the purpose of this will be to check its own approach, the FSA will nevertheless provide firms with feedback about what it finds.The last time the FSA calledAlthough the FSA has been keen to draw a clear line between the two, the latest round of regulatory reviews follows in the footsteps of its much-publicised TCF assessments, which began in 2008.Like the small firm reviews, they too began with a series of roadshows where advisers were given a clear idea of the FSA's expectations regarding the fair treatment of customers, followed by an interview with a member of FSA staff over the phone or face-to-face.The questions revolved around leadership, business decisions, controls, recruitment/training andreward, designed to establish the approach of management within businesses.Up to a quarter of the firms assessed then received follow-up visits, both to verify the process and, in some cases, address any concerns raised, with more detailed discussions and scrutiny of a larger file sample.Read more: http://www.ifaonline.co.uk/ifaonline/feature/2136767/expect-fsas-firms-review#ixzz1jAaeTpJs Wed, 11 Jan 2012 00:00:00 GMT http://www.comsuregroup.com/news.asp?newsID=1833 http://www.comsuregroup.com/news.asp#n32 Bribery Act Resources and reference materialThe Bribery Act 2010 (c.23) http://www.legislation.gov.uk/ukpga/2010/23/contentsThe Bribery Act 2010: Guidance about procedures which relevant commercial organisations can put in place to prevent persons associated with them from bribing: Ministry of Justice http://www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htmThe Bribery 2010: Quick Start Guide: Ministry of Justice http://www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htmBribery Act 2010: Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions: Serious Fraud Office http://www.sfo.gov.uk/media/167348/bribery%20act%20joint%20prosecution%20guidance.pdfFSA Anti-bribery and corruption in commercial insurance broking: Reducing the risk of illicit payment or inducements to third parties http://www.fsa.gov.uk/pubs/anti_bribery.pdfFSA one-minute guide for smaller firms on anti-bribery and corruption: www.fsa.gov.uk/smallfirms/resources/one_minute_guides/insurance_intermed/anti_bribery.shtmlFSA Financial Crime Guide: http://media.fsahandbook.info/Handbook/FC_20111209.pdfWolfsberg Anti-Corruption Guidelines, August 2011 http://www.wolfsberg-principles.com/Guidance on the Approach of the Crown Office and Procurator Fiscal Service to reporting by Business of Bribery Offences http://www.copfs.gov.uk/Publications/2011/07/Guidance-approach-Crown-Office-and-Procurator-Fiscal-Service-Reporting-Businesses-Bribery-OffencesOrganisation for Economic Cooperation and Development http://www.oecd.org/topic/0,3699,en_2649_37447_1_1_1_1_37447,00.htmlTransparency International Guidance http://www.transparency.org.uk/working-with-companies/adequate-procedures. The Transparency International Guidance also provides a range of links to a number of other helpful resources to assist in the prevention of bribery. Wed, 11 Jan 2012 00:00:00 GMT