KNOW YOUR COUNTERPARTY (KYC) &
BRIBERY & FACILITATION PAYMENTS

Corruption through bribery and facilitation payments constitutes a moral, compliance and reputational risk, which bodies operating in the jewellery and gemstone sectors are expected to manage. The risks associated with corruption are mitigated by instituting stringent Know Your Counterparty (KYC) procedures.

Bribery, a form of corruption, occurs when one person offers an incentive, which can be financial payments or material (such as gifts, holidays, schooling, entertaining), to another individual in order to obtain a business advantage. A bribery conviction could lead to the loss of an individual’s career or even a prison sentence.

Facilitation payments are payments made to expedite an administrative process to which the payer is legally entitled. These are a specific form of bribery, as they are payments made to a person in a position of power in exchange for speeding up a service, thus obtaining a business advantage. Although facilitation payments might seem less serious than other types of bribery because the payer is legally entitled to the service even without the payment, they still create an unfair advantage over other businesses. For this reason, they are considered illegal and punished by law in most countries.

A business should be able to demonstrate that it understands the law. This means that there should be someone either on staff or whom company can engage, or retain, who is responsible for knowing the legislation and regulation in the country of operation that applies to the business, and who will make sure the company is aware of how to be compliant. They should also be responsible for reviewing relevant policies and procedures every year to ensure the company continues to uphold current changes to relevant laws.

Each company should have a written anti-bribery and facilitation payments policy, or policy statement. This must state the clear intent to avoid and prohibit bribery in all aspects of the business.

The policy should be signed by the CEO or a senior manager and be easily accessible to employees and contractors. For example, the policy might be stored in a shared drive in the business’s IT system or a hard copy posted in a common meeting area, canteen or building entrance. The objective is for all employees to know that there is a policy and what that policy requires. It is recommended, too, that the policy be made available to external stakeholders on request, or posted in an appropriate location on the company website. One should also consider including the policy statement on invoices and supplier agreements.

The policy statement does not have to be stand alone, but rather can form part of a broader set of policies.

Members should establish policies that:

1. Prohibit bribery in all business practices and transactions carried out by the member and by agents acting on behalf of the member
2. Protect employees from any penalty or adverse consequences for identifying in good faith concerns related to suspected bribery, for refusing to participate in bribery, or refusing to pay a facilitation payment where facilitation payments are prohibited
3. Set the criteria and approval procedures to be followed by employees in respect of the offer and/or acceptance of gifts with third parties
4. Train relevant managers and employees on policies and procedures
5. Record relevant gifts to and from third parties in a gift register, as per the member’s policy
6. Investigate any incidences of suspected bribery within their organisation.

Where facilitation payments are permitted by applicable law, members should:

1. Undertake actions to eliminate all facilitation payments, or to reduce the size and frequency of Facilitation Payments over time
2. Ensure that any facilitation payments are of limited nature and scope
3. Implement controls to monitor, oversee and fully account for any facilitation payments made by or on behalf of the member.

An anti-corruption procedure document will ensure that a company’s staff has the guidance it needs to integrate the policy into it business activities.

The procedure should cover the following:

1. What actions your business is taking to prevent bribery and facilitation payments, such as training and implementing relevant accountability mechanisms
2. How concerns will be recorded and investigated
3. What actions will be taken if corruption is identified.

Among the activities that one should carry out to monitor how employees or agents interact with business partners and to detect potential alerts of bribery and facilitation payments is the adoption of a Gift Registry, where your employees record all gifts received.  The offer/acceptance of a gift can make a valuable contribution to the development and maintenance of good business relationships. However, gifts that create or appear to create an obligation, impacting either party’s (the gift giver or gift receiver) impartiality or constituting an undue influence on a business decision, is a form of bribery.

Setting specific the criteria and approval procedures in respect of the offer and/or acceptance of gifts with third parties and creating and maintaining a Gift Registry are an important part of an anti-bribery policy. They safeguard the company as it keeps track of all gifts received and legitimize these interactions.