Yes, that wonderful time of the year has arrived again. The time where most of your employees will receive gifts from customers and third-party. Risks are evident, but there are a few things to consider in order to maintain gift compliance. Read through the blog and ask yourself: Is your organization prepared to deal with corporate gifts this season and all year long? Are you aware of FINRA gifting guidelines?
Receiving gifts should not be a problem in your organization if used for legal and legitimate business purposes. To mitigate the risks, you must have rules and a policy in place to help employees to comply and enjoy the season of gratitude. Firms without a gift policy and process are open to regulatory enforcement says FINRA.
A gift is a tangible object such as a box of chocolates, bottle of wine, flowers, however, it can also include tickets to sporting or other events or discounts on products and services unavailable to the general public.
Firstly, it is important to make clear that gifts should be given to thank the good work or enhance relationships and not to influence employees. Transparency, integrity, ethics and corporate responsibility are very important factors from both sides, bestowers and receivers of the gifts.
As not all gifts are given based on these grounds, rules are created to “avoid improprieties that may arise when a member of the firm or its associated persons give anything of value to an employee of a customer or counterparty and to preserve an employee’s duty to act in the best interests of that customer” Financial Industry Regulatory Advice.
Establish Value Limits and Reporting
A good way to manage risks is by establishing a value limit for individual gifts and an annual value limit per customer and employee. In this way, you are avoiding extravagance and risks of non-compliance. FINRA guidelines when setting the value is “Gifts should be valued at the higher of cost or market value, exclusive of tax and delivery charges. When valuing tickets, firms should use the higher of cost or face value”.
During the onboarding, highlight to your employees about the company gifts policy. You need to make sure your employee understands the importance of the policy and its procedures. Don’t forget to ask for transparency and reporting, but ensure you emphasize this, as the festive season approaches. Make sure policies and procedures are easily accessible for every employee. You can send an email to all employees including your gift policy weeks ahead of the gift-given season.
If your employee notices the gift received is not appropriate and its value exceeds the value limit, the manager should be made aware. That’s why it is so important to provide employees a way to report and declare what they are being offered by customers. FINRA states that recordkeeping of all gifts received are mandatory, not just at Christmas.
Be attentive if these gifts are coming in a time of important transactions and negotiations. It is considered extremely inappropriate if attempts are made to persuade a favourable decision from an employee. Assure you have it documented and employees are mindful that it isn’t worth the risk. Let employees know they can always seek advice from managers or the compliance team in case they aren’t sure about certain gifts or rules regarding them.
Employees are generally willing to follow organization policies. To enhance this, you can always acknowledge good behavior and make small changes in the process to facilitate compliance. Stop and have a look at your company. Is it possible to make your compliance program more successful by using technology? We are sure it is. If you implement a comprehensive automation solution, it will help your organization to mitigate risks.
MyComplianceOffice GEH is easy to use, workflows are flexible, and you can customize rules. You can also photograph receipts and upload them to the database, or request clearance of a gift or hospitality item on the move with MyComplianceOffice mobile app for iOS and Android.
Download this successful User Case Study to know more about how our solution works and how it can help your company in your everyday compliance activities.