Barclays settles US corruption charges as 3LOD model fails again

Investigations into corrupt hiring practices by banks – in this case Barclays – in the Far East have highlighted the gaping holes that can exist in the three lines of defence compliance model, reports Denis O’Connor.

Denis O’Connoris a fellow of both the Institute of Chartered Accountants in England & Wales and the Chartered Institute of Securities and Investment. He was a member of the British Bankers’ Association Money Laundering Committee from 2003-10 and a member of the Joint Money Laundering Steering Group’s board and editorial panel between 2010 and 2016. He has been a frequent speaker at industry conferences on financial crime issues, both in the United Kingdom and abroad.

Barclays recently agreed to pay the US Securities and Exchange Commission $6.3 million to settle charges brought under the 1977 Foreign Corrupt Practices Act (FCPA) that the firm’s investment banking arm between April 2009 and August 2013 hired 117 relatives and friends of senior public officials to win or retain business in China, Hong Kong and South Korea. [1] The case also reveals another failure of the three lines of defence (3LOD) model of managing compliance and regulatory risks that is currently widely employed in the financial services industry.