compliance function
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Key Individual chapter 3
Source: Section 35 (1) (c) and 17 (1) (a) of FAIS ACt
Source: Section 17 of FAIS Act
Monitor compliance with the ActSupervise the compliance function
Make recommendations to FSP on any aspect of compliance and monitoring functions
Submit reports to the Registrar as required by FAISTrain Key Individuals and representatives on FAIS legislation
FAIS requires the Compliance Officer to provide the FSP with written reports on Compliance monitoring duties and make recommendations
to the FSP
Source: Section 17 of FAIS Act
Compliance Officers should take steps to encourage FSP’s ( Key Individuals) to improve their Compliance function, particularly when
they become aware of deficiencies.
Compliance Officers are required to supervise the Compliance function. Compliance Officer must ensure that the requirements of
FAIS are met through procedures which the FSP (Key Individual) must establish.
Direct examination of the Compliance function at the time of license application;
Source: Section 17 of FAIS Act
Direct examination of the Compliance function as part of the general on-site inspections of the FSP, which may be
conducted either on a regular basis or pursuant to a risk-based approach;
Direct examination of the internal Policies, operational
procedures and controls
Periodic assessment which should be filed with the regulators for review; revising and re-examination of the Compliance
function where issues had previously been identified with the FSP about the operation of the function.
Effective organisational structure•FSP operates effective organisation and administration• Monitors measures designed to ensure steps taken•To prevent COI from affecting all stakeholders
Segregation of duties•Key activities which led to COI must be segregated•Adequate internal processes regulate activities•Activities carried out with appropriate level of independence
Governance•FSP /board is responsible for ensuring COI policies issued•Compliance Officer monitors compliance with regulation and internal
rules
Business is about profits and not usually about compliant profits
CO who is part of FSP management team will have difficulty in acting independently and objectively in all management and oversight functions
CO who is part of FSP management team will have difficulty in acting independently and objectively in all management and oversight functions
Compliance Officer must at all times act independently and objectively and should where possible have functions segregated from production and
profitability of the FSP
Compliance Officer must at all times act independently and objectively and should where possible have functions segregated from production and
profitability of the FSP
The concept of independence does not mean that the Compliance function cannot work closely with management and staff in the various
business units
The concept of independence does not mean that the Compliance function cannot work closely with management and staff in the various
business units
Source: Basel Committee on Banking Supervision April 2005
Source: Basel Committee on Banking Supervision April 2005
The independence of the Compliance Officer and any other staff having Compliance responsibilities may be undermined if they are placed in a position where there is a real or potential conflict between their compliance responsibilities and their other
responsibilities.
Where possible compliance function staff should perform only compliance responsibilities. This may not be practicable in smaller businesses. In these cases, therefore, compliance function staff may perform non-compliance tasks, provided
potential conflicts of interest are avoided.
The independence of compliance function staff may also be undermined if their remuneration is related to the financial performance of the business line for which
they exercise compliance responsibilities.
CO should not be placed in a position where there is a possible conflict of interest between their compliance responsibilities and any other responsibilities they may have.
Internal controls are the process effected by an FSP to provide reasonable assurance regarding the achievement of objectives in these categories:
• Effectiveness and efficiency of operations • Reliability of financial reporting
• Compliance with applicable laws, regulations and internal policies •In essence it is the management of business risks and is a dynamic process that changes
as personnel and circumstances change.• The process includes organizational design, written policies and procedures, operating
Policies and practices and physical barriers to protect all assets and personnel.
Source: Epsilon Compliance Consultants
Statutory Policy Operational procedures Client Engagement
Category confirmation Compliance function Comply license License and experience disclosure
Key Individual Record maintenance Verify FSP compliance Services and costs
Fit and Proper Conflict of interest Identify unregulated products
Know your client
Representatives Furnishing advice Verify functions on short term lines
Product and accreditation
Supervision Custody of products Verify reps compliance FICA
Qualifications Risk management plan Record keeping Fact finding and analysis
Approved Products list Advertising Verify disclosures Minutes
Unregulated products Complaints resolution Record of advice Proposal and ROA
Source: Epsilon Compliance Consultants
Statutory Policy Procedure Client Engagement
Monitor and verify Termination of services Code of conduct Quotes
Indemnity Business Continuity Custody of client assets Reviews
Maintain records FICA Advertising Communication
Operational ability Risk management Waiver of rights
Financial management Financial management and audit
FICA
Short term premium collection
Forex
Health administration
•Framework and manual
•Framework and manual
•Risk plan, continuity plan and anti-money laundering
•Risk plan, continuity plan and anti-money laundering
•Identify, assess , advise, monitor, report
•Identify, assess , advise, monitor, report
•Internal and External
•Internal and External
Compliance officer
Roles and responsibilities
Compliance policy
Risk management
An independent function that identifies, assesses,
advises on, monitors and reports on the FSP’s
Compliance risk, that is, the risk of Legal- or
regulatory sanctions, financial loss, or loss to
reputation a FSP may suffer as a result of its
failure to comply with all applicable laws,
regulations, codes of conduct and standards of
good practice (together “laws, rules and
standards”)”.
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