UPDATE 1-UK FSA fines Aon Ltd for weak anti-bribery controls

* Aon Ltd fined $7.9 million

* Fine is FSA's "largest financial crime-related fine"

* FSA says Aon Ltd's response was "model of best practice" (Adds detail, background)

LONDON, Jan 8 (Reuters) - The UK Financial Services Authority said it had fined insurance broker Aon Limited 5.25 million pounds ($7.9 million) for failing to ensure payments to overseas intermediaries were not used to pay bribes.

Aon, a unit of U.S. insurance broker Aon Corp, did not adequately scrutinise about $7 million in payments to companies and individuals in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam, the FSA said in a statement on Thursday.

The recipients of the payments, made between January 2005 and September 2007, had assisted Aon Ltd in winning business from overseas clients.

"Aon Ltd failed adequately to question the purpose and nature of these suspicious payments in circumstances where it ought to have been reasonably obvious to Aon Ltd that there was a significant risk that the overseas third party might bribe the insured, the insurer or a public official," the FSA said.

"This is the largest financial crime related fine imposed by the FSA to date," FSA director of enforcement Margaret Cole said.

The FSA added that Aon had cooperated fully with its investigation, and had qualified for a 30 percent reduction in the fine by agreeing to settle at an early stage of the enquiry.

The regulator also praised Aon's efforts to improve its controls, describing its approach as "a model of best practice that other firms may wish to adopt".

Aon Ltd said the failings arose mainly in its aviation and energy insurance operations, and had led to "potentially inappropriate" payments.

"We recognise and regret the failings that occurred in our systems and controls for payments to third parties," Aon Ltd Chief executive Peter Harmer said in a statement. (Reporting by Myles Neligan, editing by Will Waterman)