The Isle of Man Bribery Act ("IOMBA") came into force on 16 December 2013 and significantly changed the landscape from the standards required under the Corruption Act 2008. The IOMBA is similar in nature to the UK Bribery Act and creates the same four offences of giving and receiving a bribe, bribing a foreign public official and the corporate offence of failing to prevent bribery.
It is this corporate offence of failing to prevent bribery that makes the IOMBA such a significant piece of legislation, as the only defence to it is that adequate anti-bribery procedures are in place. Whilst, in our experience, financial services companies, which are part of larger groups, generally already have a range of anti-bribery procedures, there are many Isle of Man entities, particularly in the non-financial services sectors, which do not.
In addition to the corporate offence, the scope of the IOMBA is also something which it is vital to understand. It applies to all Isle of Man companies, including Isle of Man structures administered by CSPs, as well as to subsidiaries, intermediaries, joint ventures, agents etc of Isle of Man companies regardless of where they are in the world. The IOMBA uses the definition of 'associated person', which encompasses any individual or entity which performs services or functions on behalf of the Isle of Man company and so these must all be taken into account in developing 'adequate procedures'.
The Department of Home Affairs has consulted on guidance as to what 'adequate procedures' will entail. This guidance is based on six principles, leaving application open to interpretation on a per organisation basis. We anticipate that this will be challenging for some organisations which are used to and have a preference for prescriptive regulation.
The essence of 'adequate procedures', based on the consultative guidance, is that an Isle of Man company will undertake a risk assessment to identity where it is vulnerable to the risk of bribery and corruption. This risk assessment must take into consideration all associated persons of the company as must the anti-bribery procedures which the company puts in place to mitigate against identified risks. The board must be involved in the risk assessment and the development of procedures and are responsible for communicating the anti-bribery policy internally and externally. Due diligence on business partners and employees will be an important part of anti-bribery defences as well as providing anti-bribery training and having mechanisms in place to review that procedures and processes are working effectively.
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