Many people in the regulatory sphere would agree that the run up to April is the most intensive, time consuming and resource demanding time of the year mainly because of the number of annual regulatory submissions for both Financial Intelligence Analysis Unit (FIAU) and the Malta Financial Services Authority (MFSA) which are due. Now, with these regulatory submissions out of the way, can those aforementioned persons relax and wait for the next round?
Whilst the preferred answer would be a clear and loud “Yes”, in reality, this is a crucial time to keep up the momentum and move on to what very likely is the most fundamental step that subject persons should be taking.
Whilst meeting regulatory deadlines is important, the timely completion and submission of regulatory returns should not be the sole aim. Both the Risk Evaluation Questionnaire (REQ) and the Annual Compliance Return (ACR) contain questions which are meant to trigger reflection as to whether the AML/CFT (Anti-Money Laundering/Counter-terrorism Financing) and compliance controls that a subject person has in place are robust enough to mitigate the risk exposures identified. Within the AML/CFT space, the Business Risk Assessment (BRA) includes an in-depth control assessment, and in analysing the effectiveness of controls, subject persons are bound to identify areas of improvements to its AML/CFT framework.
Many-a-time, in completing regulatory returns, mental notes are taken of improvement actions with the intention to pick these up at a later date. Before the usual day-to-day activities completely take over, this is the best time to dedicate time and effort to re-think of all the improvements thought of and document them in an action plan. The documentation of actions carries a number of benefits:
Rome wasn’t built in a day and identified actions will need to be spread out. Planning at an early stage allows for the right determination and allocation of priority in order to tackle such actions.
Inevitably the execution of an action plan will require resources. The compilation of an action plan will allow to establish what and how many resources will be needed. Will the internally available resources manage all the actions identified or will the assistance of third parties be needed?
Documentation is a crucial aspect of maintaining a healthy compliance framework. The documentation of actions identified, approval of such plan and the subsequent updates to this document will provide the right evidence to regulators during compliance visits of the efforts actually employed to improve compliance frameworks in place.
Documented action plans provide the right basis for directors, Money Laundering Reporting Officers (MLROs) and Compliance Officers to retain focus during the year. Such plans facilitate tracking of progress and ensuring that agreed upon timelines for actions to be completed are indeed observed. With respect to on-going AML/CFT and compliance efforts, comprehensive and informed discussions at risk committees and/or board meetings, as applicable, can easily revolve around the contents of such a document.
Even sole practitioners benefit from maintaining a documented action plan. Whilst no board meetings will be taking place, retaining focus on identified actions is as important as it is for a corporate entity.
The documentation of identified actions and the subsequent updates to such a document, will facilitate the compilation of subsequent returns and updates of BRAs.
How can PwC assist?
Our Regulatory Team has been working with a number of subject persons across a number of sectors. Besides tailoring action plans to the subject person and ensuring adequate and comprehensive updates, our experts will also assist in identifying limiting factors to the successful execution of such plans. After all, “before anything else, preparation is the key to success”.
If you would like more information, feel free to get in touch with us.
