It has been an interesting few weeks with lots of nervous Directors concerned with their compliance functions and wondering what to do in light of the recent Commission’s findings and fines that have been publically issued. What must be remembered is that the Directors are responsible for the compliance function and framework (Chapter 2 of the Commission’s Handbook’s) of their business and not the consultants they may employ. So what needs to be done?
Don’t Panic! There really is little point in panicking and it will only tend to make things worse. Panicking only creates more fears, which may not be justified in some cases, fear then leads to aggression and that only leads to breakdown in communication. The key in gaining an understanding of what has happened and where your business may sit in the regulatory framework will be down to communication with your compliance provider.
Review your compliance framework. Are you satisfied that you have all the evidence to support the previous findings of your compliance function provided by your consultants? Does their review go far enough and look at all the areas of the regulation that pertains to your business? Are they evidencing their findings suitably to back up their conclusions? At the end of the day your compliance framework is your responsibility and you need to evidence that you are satisfied with it, those that undertake the review role and that you have oversight to control it.
I have previously had licensees who would sit down with me during the year and go through my monitoring programme and how they correlated to the reports I was providing them. The positive was that it gave them comfort and evidenced to the Commission that they had true oversight and control of their compliance framework.
Communicate clearly and calmly. This is important, the oversight review you have done will provide you with questions that you need to have satisfied. In light of the recent Commission actions and public statement released, you will also need to know the facts of what happened and why it happened as you need to assess if you could find yourself in the same situation of being incorrectly reported to on the regulatory requirements.
Even if your provider was not concerned in the recent Commission’s action you need to ensure that they would not put your business in jeopardy. It is important that from your review you can put any queries or concerns across in a calm manner. Your consultants may be defensive but the discussion needs to be open and honest so you can establish the facts. It is vital that your consultants and/or their management have the ability to constructively deal and satisfy any questions or concerns you may have.
Potential areas to discuss and obtain evidence on. Are you satisfied with the work that has been and continues being undertaken? Do you need to increase the time that the consultants provide to your business? Is the compliance monitoring utilised to assess your business suitable? Do the reports provided to you evidence the review that has been undertaken and do they cover the requirements of the regulatory framework? Are you getting the service that you require and want, remember you are the customer here!
Are the consultants suitably qualified or knowledgeable in the areas pertaining to your business, and have you got the evidence? It is always best to assume that you need enough information to satisfy yourself as you would for any of your employees. Your compliance consultants will be able to provide you with evidence of the consultant’s qualifications and suitability. I was always more than happy to provide my certificates to licensees as I am very proud of what I have achieved!
Review, assess, conclude and evidence. Once you have the responses to your queries and concerns, you will be in a situation where you can review and assess where your current framework is and where it is going. You may be satisfied that everything is suitable or your compliance consultants are making changes to bring their game up for you and are able to service your requirements appropriately going forward. You may find that it’s time to bring your compliance function in-house wholly or partially, or if you remain unsatisfied you have the option to move to another provider, but do your due diligence.
What is vitally important in your conclusion is that you evidence all of the findings. The Commission will be asking you the questions about your compliance framework, how you monitor and mitigate the risks and are able to ensure oversight. You will be held accountable by the Commission so you need to have the answers and evidence. It’s just good Corporate Governance at the end of the day.
I was approached earlier this week by a Licensee who had just been visited by the Commission. The Commission was impressed that AML/CTF was discussed and documented at their meetings and how this evidenced the oversight and responsibility the Licensee took. One happy Licensee always means one happy Compliance monkey. This shows the power of good minutes and how the Commission view the importance of them in the evidencing of the oversight of the compliance function taken by Licensees.
At the end of the day you do not want to be jumping from the frying pan into the fire. People make mistakes it is whether they can learn from them. Whatever conclusion you come to will allow you to make the best decision for your business, just make sure that it is clearly evidenced. Don’t change just for change sake!