The UK Financial Conduct Authority (FCA) has imposed a monetary penalty of £1.8m on insurance broker JLT Specialty Limited (JLTSL) for failing to have appropriate checks and controls in place when making payments to overseas third parties.

During the probe the British market watchdog found that JLTSL did not conduct proper due diligence before entering into relationships with partners in other nations who helped the broker secure new business between 2009 and 2012.

Furthermore, JLTSL also failed to effectively assess the potential risk of new insurance business secured through its existing overseas introducers.

During this period, JLTSL pocketed approximately £20.7m in gross commission from business offered by overseas introducers, and paid them over £11.7m in return.

FCA enforcement and financial crime director Tracey McDermott said these failings are unacceptable given JLTSL actually had the checks in place to manage risk, but didn’t use them effectively, despite being warned by the FCA that they needed to up their game.

"Businesses can be profitable but firms must ensure that they take the necessary steps to control the risks in that business," McDermott added.

The market regulatory agency said that the poor systems around these payments created an unacceptable risk that overseas introducers could use the payments for corrupt purposes.

The initial penalty was £2,684,013. However, the FCA has agreed to reduce the fine by 30% to £1,876,000, as JLTSL agreed to settle at an early stage of the investigation.