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How is Legg Mason Complying with ISO 37001?

ISO 37001 is the only anti-bribery management system in the business world. Introduced in October 2016, this international standard was designed to advocate a series of measures that, when implemented, help public or private companies of all sizes prevent and tackle bribery. Legg Mason is one of the first companies in the world to be awarded the accredited certification under this standard. Legg Mason is a global asset management firm with nine independent investment managers and $763 billion in assets under management as of November 30, 2017. The public company serves clients on six continents, both directly through its investment affiliates and indirectly, through financial intermediaries.

 

Earlier this year, Legg Mason announced plans to adopt ISO 37001 for its operations. Speaking on behalf of the company, Pia Ongteco McLaine, the Compliance Manager of Legg Mason explains the challenges and the benefits of implementing ISO 37001: “One of the biggest challenges we had in implementing the ISO 37001 standard was to find the right certification body. There was no shortage of information regarding the new standard, but not many accredited providers were able to grant certification. Fortunately, after identifying PECB North America, we were able to work with the firm to achieve certification in this new standard.”

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Implementing ISO 37001 has many benefits, including promotion of trust and confidence but also avoidance of reputational damage and unnecessary costs by implementing the necessary measures to prevent bribery. As Pia has stated, with this standard, Legg Mason’s global compliance program has a stronger anti-bribery framework in place. “It reaffirms our reputation as an ethical organization, providing strong evidence of our commitment to anti-bribery. The benchmarking, annual ISO audits follow up and documentation will show governing bodies our pledge to continually improving our program over time. Hence, the ISO 37001 represents a standard that not only addresses UK and U.S. regulations, but also global standards. This standard provides also guidance for Legg Mason and other companies to organize and strengthen their compliance programs. With the required ISO 37001 annual surveillance audits, Legg Mason will be held accountable to continuously improve its program”.

 

As we discussed the benefits, Pia elaborated details on how Legg Mason considered the new standard as a competitive advantage in the market. Legg Masson is already receiving Requests for Proposals (RFP) for new business inquiries and also questions on whether Legg Mason has implemented ISO standards. This will be a major differentiator to existing clients and potential new books of business. Transparency is a valued and critical aspect of our business. Legg Mason actively works to make sure we are respecting ethical boundaries and doing the right things for clients and each other”.

 

The path of implementing ISO 37001

 

A Hostile to gift Administration Framework is the foundation of a shut circle control design that sets up, establishes, implements, maintains, reviews and improves management strategies which address the particular requirements of ISO 37001 standard. Even though the nature of an organization differs from one another, this standard addresses management objectives for the prevention of bribery.

 

Since the UK Bribery Act was enacted in 2010, companies incorporated in the region have been placed under a microscope, explains Pia. ‘’At Legg Mason, we take anti-bribery very seriously and have been continually enhancing our Anti-Corruption program. We formatted our program according to guidance provided by the UK Ministry of Justice; by building out our existing policies, conducting regular risk assessments, providing in-depth training, bolstering due diligence procedures, and surveying internal and external stakeholders. In constantly assessing our program, we determined it was important to obtain certification for the new ISO 37001 standard. After we selected PECB North America as our certification body, we worked closely with their team to agree on the scope and schedule the onsite”.

 

We looked at each requirement for the ISO 37001 international standard and compared it to our existing compliance and anti-bribery program. This helped us to identify specific critical points which needed to be addressed or improved. Separately, we also pay attention to relevant industry commentary and regulatory cases to evaluate and implement leading-edge compliance practices for the financial industry. While onsite, PECB North America spoke to several employees, conducted interviews, and reviewed many of the policies, procedures, and documentation’’.

 

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Legg Mason future with standards

 

‘’We are currently implementing a series of extraterritorial regulations as a result of our audit with PECB North America. At this time, we are dedicating our focus to ISO 37001, but we are certainly always looking at how we can align our programs with industry best practices’’. Standards can be a great help to meet the market’s needs, and Legg Mason thinks so, as well. ‘’Yes, I think having firm compliance standards in place can help clients feel more comfortable and confident that they are dealing with a company that takes care to ensure they are providing quality services, products or goods”.

 

The Legg Mason Compliance department is currently focused not only on keeping up with the changing regulations all over the world, but also on regulatory technology, and methods how this technology can be used to meet the demands of a growing business. ‘’We have a dedicated analytics team that is focused on using technology for monitoring and reviewing the business”.

 

Compliance perspective

 

Legg Mason is a global company with 39 locations and nine global investment firms worldwide. As such, training and preparing the compliance management team is crucial to a successful outcome. ‘’It is critical to keep our global structure in mind as a compliance manager. In many cases, rules and regulations can be extraterritorial, so each of our compliance managers is trained to consider how standards can be applied around the world”.

 

Legg Mason prioritizes sound corporate governance practices attributing to the firm’s success. By also reinforcing employees’ responsibility to adhere to regulatory requirements and internal policies, Legg Mason works actively to make sure it is respecting ethical boundaries and doing the right things for clients and each other. ‘’Consistent with a focus on good governance, Legg Mason’s executive committee emphasizes to employees the importance of our “No Chalk on our Shoes” standard. The “No Chalk” standard is a continual reminder that employees should demonstrate good judgment and stay well within boundary lines of ethical behavior’’, explained Pia.

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