Compliance function

1. Compliance function Key Individual chapter 3

2. 50. Requirements for approval of compliance officer Source: Section 35 (1) (c) and 17 (1) (a) of FAIS ACt

3. 50. Role and function of compliance officer Source: Section 17 of FAIS Act Monitor compliance with the Act Supervise the compliance function Make recommendations to FSP on any aspect of compliance and monitoring functions Submit reports to the Registrar as required by FAIS Train 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

4. 50. Role and function of compliance officer 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;

5. 50. Role and function of compliance officer 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.

6. 51. C O independence from management of FSP • 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

7. 51. Independent function of CO Source: Basel Committee on Banking Supervision April 2005 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 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

8. 52. CO avoidance of conflicts of interests 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.

9. 53. Internal audit and control functions for CO ensure no potential conflicts of interests • 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.

10. 54. FSB Compliance Report Source: Epsilon Compliance Consultants

11. 54. FSB Compliance Report Source: Epsilon Compliance Consultants

12. 55. Oversee and manage compliance functions • Internal and External • Identify, assess , advise, monitor, report Compliance officer Roles and responsibilities Compliance policy Risk management • Framework and manual • Risk plan, continuity plan and anti-money laundering

13. 55. Explain FSP compliance function 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”)”.