Regulatory risk is defined as the risk of suffering financial or reputational damage as a result of failure to comply with laws and regulations, and with group and other externally defined policies and standards”
Having obtained authorisation approval, your regulated financial services firm will move into the next stage of the regulatory business cycle and will be required to meet and demonstrate compliance with the ongoing obligations as required by the Financial Regulator i.e. regulatory risk management.
How can the regulatory compliance team assist you?
Whatever the financial services business sector that your firm operates within, we can assist you in all aspects of meeting the ongoing legislative and regulatory obligations that apply to your firm.
Our Services include:
- Compliance frameworks / risk based compliance monitoring
The compliance function is coming under ever increasing pressure, recent regulatory developments such as the Consumer Protection Code, Minimum Competency Requirements and the Markets in Financial Instruments Directive have only resulted in imposing additional requirements to the already heavily burdened compliance professional. Compliance departments are adding more and more resources and taking on further responsibilities in an attempt to stay on top of the ever changing regulatory landscape.
We believe that a risk based approach to compliance is the best response to the risk based supervisory regime adopted by the Financial Regulator.
A risk-based compliance monitoring programme involves identifying the areas of high risk within your organisation and building upon and prioritising your compliance monitoring programme around these risks. This type of approach will focus your organisation and your compliance resources on the areas of high risk and in particular, those key risks which are most likely to cause concern. In turn, this approach highlights the importance of compliance, which should be fully embedded and integrated within the business and should not operate as a function executed in a vacuum.
Our risk based compliance monitoring framework will provide:
- Assistance with the identification of inherent and residual compliance risks within your organisation.
- Support with defining your risk appetite.
- Design and development of a ‘compliance universe’.
- Design and development of Key Performance Indicators (KPI’s).
- Assistance with the design of compliance monitoring programmes and reporting documentation.
Why Choose PwC?
- We have assisted many clients across a wide business spectrum in the development of a risk based compliance monitoring framework and specific to the firm’s needs and requirements.
- Our extensive compliance experience in this area allows us to tailor specific programmes to meet the needs of your organisation and in terms of addressing fully, the key areas of risk inherent in your business while ensuring these risks are appropriately monitored and given adequate focus.
- We will bring, to your firm, industry best practice models and critically examine and benchmark your organisation against these models, supporting you in implementing recognised gaps where appropriate.
- Compliance function effectiveness
In conjunction with the widespread recognition of risk based compliance monitoring as being at the forefront of best practice in compliance management, is a move to develop methodologies and processes for actually assessing the effectiveness of the compliance function. In an industry of ever changing regulation, financial services firms remain constantly challenged in keeping their compliance function in line with new requirements and it is often difficult when operating within the area to objectively assess the extent to which the compliance function is performing against it objectives and discharging its duties.
In general, this consists of performing a review of the compliance function under some or all of the following headings:
- Strategy & policy.
- Structure, roles & responsibilities.
- Understanding of obligations.
- Measurement (KPI's) & improvement.
- Documentation.
- Communication & interaction.
- Monitoring & response.
- Reporting.
This type of review can be completely tailored to your requirements, incorporating 'deep dive' reviews of areas of particular concern or providing a high level analysis of the overall effectiveness of your compliance function.
Why Choose PwC?
- We offer independent objective advice; we are not linked to any particular part of a client’s business and can objectively examine all elements of the business.
- The regulatory compliance team has the technical skills to support firms in determining the effectiveness of a firm’s compliance function. We have extensive experience in brining firms in line with the applicable legislation and furthermore providing assurances around the effectiveness of their compliance function to meet these legislative requirements.
- Compliance health checks
The Financial Regulator has indicated, through its Strategic Plan 2008 – 2010, that it is continuing to increase it’s supervisory and enforcement powers (e.g. on-site inspections and the Administrative Sanctions regime). With the move towards more in-depth risk based monitoring and in conjunction with the regulator’s strategic objectives, there is an increased need to validate your firm’s compliance with the key legislative framework applicable to it. By way of example, having fully implemented the Consumer Protection Code, the Financial Regulator has now moved to monitoring firms compliance with the Code by use of themed inspections and mystery shopping exercises. How comfortable is your firm that your organisation will perform well in the face of an on-site visit, themed visit or mystery shopping undertaken by the Financial Regulator?
Our service offerings include:
Assistance with preparation for these scenarios by conducting a compliance “health-check” within your organisation. This “health-check” can be tailored to your requirements (i.e. we can review your performance against all your compliance obligations or only a very narrow portion of your compliance obligations) and would typically involve the following:
- Interviewing key stakeholders within the firm.
- Review of the compliance processes within the organisation.
- Review of approach to and organisation of compliance within the organisation i.e. how compliance is organised and embedded throughout the organisation, including benchmarking against good / best practice.
- Testing performance of processes against compliance obligations i.e. sampling.
This type of “health-check” will provide you with an independent view of the state of compliance within your organisation.
Why choose PwC?
- We can work with you and tailor specific health check programmes to provide the specific assurances around the compliance requirements applicable to your firm.
- We have a diversified range of experience and best practice industry knowledge, this is key to addressing the issues detected during a the in-depth “health check review”.
- Anti money laundering reviews
The Financial Regulatory Authority has indicated in their strategic plan that they intend to strengthen the prevention of money laundering regime. Across all jurisdictions and due to the ever increasing fight against terrorism and drug trafficking, there is increased emphasis on strengthening Anti Money Laundering regimes and there is greater onus on individual firms and money laundering reporting officers to ensure that sufficient resources, systems and experience are in place to prevent and detect money laundering issues.
In addition to the current Anti Money Laundering (AML) responsibilities is the forthcoming transposition of the Third Anti Money Laundering Directive. The new directive increases the scope of firms captured under the definition of designated bodies, introduces enhanced measures and obligations for designated bodies to verify beneficial ownership and establishes a new risk based due diligence approach to the Anti Money Laundering regime.
Financial Institutions are increasingly aware that as well as costly litigation and large fines, successful penetration by money launderers may also cause incalculable damage to corporate and professional reputations and careers.
A thorough and robust anti-money laundering programme is key to safeguarding your business from the threat of money laundering.
PwC provides firms with detailed AML assistance and support services including but not limited to the following:
- Diagnostic / review / gap analysis of AML/ATF policy and procedures against AML and financial crime regulations and industry best-practice;
- Design and optimisation of AML/ATF internal controls;
- Designing and implementing adequate and effective procedures;
- Review of data management, and Know Your Customer (KYC) systems;
- Evaluation of the new 3rd Money Laundering Directive on the impacted part of your business model;
- Developing and implementing a risk-based AML control framework and monitoring programme;
- Assistance and support in dealing with regulatory enforcement actions and remediation exercises
Why Choose PwC?
- We have assisted many clients across a wide business spectrum to enhance their Anti Money Laundering Regimes.
- We have performed detailed gaps analysis of the AML procedures, designed and upgraded current frameworks not only to help establish that they operate within the legislative requirements but also to provide assurance that they are sufficiently robust to safeguard the business in this challenging environment where we are seeing more and more sophisticated measures to launder money.
- Compliance training support services
In this ever developing compliance environment where firms are struggling to implement new regulation and keep up to date with industry best practice standards, it remains challenging to maintain the balance of implementing these requirements within the compliance framework while ensuring that compliance staff and personnel have the relevant training and experience to operate within the compliance framework.
PwC offers compliance training and support services to develop your compliance knowledge and educate your staff on the key elements required to for the effective operation of your compliance framework.
PwC offers many specific compliance training programmes covering all aspects of compliance requirements, some of these specific programmes are listed below:
- Compliance function effectiveness.
- Anti Money Laundering requirements.
- Compliance with the Markets in Financial Instruments Directive (MiFID).
- Economic capital training and compliance with capital requirements.
- Implementation of a risk based compliance framework.
- Implementation of an effective governance model.
- Effective compliance monitoring.
These training programmes are an example only of the training services available, specific training programmes can be tailored to meet your organisation’s compliance knowledge gaps where required.
Why choose PwC?
- We have assisted many firms to meet their compliance training requirements, designing specific training programmes for both compliance and operational staff across the business.
- We have a dedicated team of professionals in each business category within the financial services sector and who provide a wide scope of training curriculum.
- Capital adequacy & regulatory reporting rervices
Firms subject to capital adequacy/solvency requirements must fulfil their obligations to monitor and assess the level of regulatory capital which must be maintained on a continuing basis. It is imperative when undertaking this process that the firm takes account of changes in the business structure, its operations and any new transactions and activities which impact the level of required capital that must be maintained. Firms failing to either adequately provide for, or monitor the required capital appropriately on an ongoing basis could be faced with regulatory sanctions.
The regulatory and compliance services team can provide many support services in assisting firms comply with their capital adequacy/solvency and related regulatory reporting obligations.
Example of our services in this area:
Capital Requirements Directive (‘CRD’)
Since its implementation on 1 January 2007 banks and investment firms have been required to comply with the new capital adequacy provisions introduced by the CRD. We offer a suite of services in this area:
- Capital adequacy treatment for transactions and structures including consolidated supervision implications;
- Transition to the Advanced Approaches for credit and operational risk, including model validation and self assessment reviews;
- Independent review of ‘Internal Capital Adequacy Assessment Process (‘ICAAP’) required under Pillar 2, including remediation assistance on risk and control frameworks, and capital planning issues;
- Implementation of economic capital frameworks;
- Pillar 3 implementation, including managing the overlap with IFRS 7, and production of disclosures and composition of disclosure policy statement.
Regulatory reporting
All regulated firms are required to submit information to the Financial Regulator on a regular basis, and to have in place processes and controls to facilitate the accuracy and completeness of that information. We assist firms with the following:
- Compilation of regulatory reporting returns;
- Review of control infrastructure for regulatory reporting framework;
- Review of accuracy and completeness of regulatory reports (this can take the form of an Internal Audit if required);
- Reviews on the completeness and accuracy of Fund Management Company Capital Adequacy Returns;
Why Choose PwC?
- We have worked with a number of firms with implementing the appropriate capital adequacy framework and providing assurance reviews on the completeness and accuracy around the required level of capital to be held. Our experience extends to banks, insurance companies, investment firms and fund management companies.
- We can provide professional advice on the interpretation of capital regulatory requirements; we have a dedicated team of specialists in relation to capital adequacy requirements who have extensive knowledge and insights into industry practices.
- Client money audits
Client money is money which, in the course of carrying on investment business, a firm receives, holds, controls, or pays out for or on behalf of clients. Money, in turn, includes cash, cheques or other payable orders together with current and deposit accounts maintained with credit institutions or relevant parties. Client investment instruments consist of investment instruments which, in the course of carrying on investment business a firm receive, hold, controls or pays out for, or on behalf of, clients.
A firm, which receives, holds, controls, or pays out client money or client investment instruments must do so only in accordance with the client money requirements.
PwC can assist you with an assessment of compliance with the financial regulators client money requirements including:
- Review and reporting of client money policies & procedures.
- Interaction with Audit for current Section 10 IIA firms.
Why PwC?
- The PricewaterhouseCoopers brand brings a distinctive level of quality assurance.
- Remediation assistance
If your firm is facing a regulatory on-site inspection, we can assist in your preparation prior to the regulatory review and provide you with some comfort that your business is operating in line with the regulatory requirements.
If your firm has just undergone an on-site regulatory review and there are noted action points, we can assist you in addressing these regulatory issues to so that your business is in line with the current and forthcoming regulatory requirements.
Examples of our work in this area include:
- Pre-Inspection advice and assistance.
- Follow up regulatory assistance from Financial Regulator Inspections.
- Regulatory remediation projects.
Why Choose PwC?
- We have assisted a number of firms in identifying the legislative gaps in their compliance frameworks and provided support in formulating action plans to bring their business into line with the regulatory requirements.
- We have provided project management assistance to successfully implement the required changes and so that the firm is no longer on the regulator’s watch list.
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