Essential Strategies for Financial Services Compliance. 2nd Edition

  • ID: 3024931
  • Book
  • 400 Pages
  • John Wiley and Sons Ltd
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Compliance officers perform a vital role in financial services after all, the consequences of non–compliance can be severe. However, they face a unique set of challenges. On the one hand, they must find a way through the complexities of the various rules, regulations and best practice guidelines which apply to their business, and maintain an effective and comprehensive compliance programme which is tailored for their firm. On the other hand, they also need to manage the tension between commercial interest and regulatory necessity, and engage with rest of the business to promote the value of an effective compliance department.

This second edition of Essential Strategies for Financial Services Compliance has been fully updated to encompass the current regulatory environment, which has evolved significantly since the first edition was published in 2008. Within this new context, it explains the role of the compliance department and where it fits within the organization, outlines the scope and limits of the department′s responsibilities, and suggests how its activities can be communicated effectively to the rest of the firm.

Extensive guidance is provided on the day–to–day application of regulatory requirements, as well as advice on what to do when things go wrong, and strategies for dealing with unusual problems. It provides answers to questions such as:

  • What should you do if your advice is ignored?
  • How can you establish your bearings when you venture into an area of regulation which is unfamiliar?
  • How can you engage the rest of the organization and get the business on your side?

With numerous case studies, hints and tips, and examples arising from the extensive experience of the authors, Essential Strategies for Financial Services Compliance is the complete guide for anyone working in compliance, as well as those outside the compliance function who want or need to understand it better.

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Acknowledgements ix

List of Abbreviations xi

Preface (Or, How Not to be an Execution Officer) xvii

Foreword to the First Edition xxi

Foreword to the Second Edition xxiii

PART ONE COMMENTARY AND CONTEXT 1

CHAPTER 1 The UK Regulatory Environment 3

1.1 Regulation in the UK 3

1.2 Different regulatory regimes in the UK 5

1.3 The FSMA regime for investment business 5

1.4 The UK s anti–money laundering regime 11

1.5 The UK s takeover regime 13

1.6 Other UK regulatory regimes 13

CHAPTER 2 The Compliance Function 15

2.1 Compliance as a concept 16

2.1.1 What is Compliance? 16

2.1.2 Who is responsible for Compliance? 19

2.1.3 Different Compliance models 21

2.2 The Compliance Officer 22

2.2.1 Key responsibilities of the Compliance Officer 22

2.2.2 What are the characteristics of a good Compliance Officer? 24

2.3 Compliance: good and bad 26

2.3.1 What are the characteristics of a good Compliance regime? 26

2.3.2 What are the characteristics of a bad Compliance regime? 30

2.3.3 Danger signals 32

2.4 The argument for Compliance 33

2.4.1 What are the benefits of Compliance, regulation and the Compliance Officer? 33

2.4.2 What are the costs of Compliance? 40

2.5 Compliance as a profession 41

CHAPTER 3 The Compliance Contract 45

3.1 The Compliance Mission Statement 46

3.2 The Compliance Charter 47

3.2.1 Contents of a Compliance Charter 47

CHAPTER 4 Mapping Your Compliance Universe 53

CHAPTER 5 Mapping Your Corporate Universe 57

5.1 Operating entities 57

5.2 Business units 61

5.3 External Service Providers 66

CHAPTER 6 Regulators and Other Industry Bodies 69

6.1 Exchanges 70

6.2 Clearing houses 76

CHAPTER 7 The Legislative Environment and Rules Mapping 77

7.1 Rules mapping 79

7.2 Detailed rules mapping for your own firm 79

7.3 Rules mapping for an overseas jurisdiction 82

CHAPTER 8 Financial Products, Services and Documentation 85

8.1 Products and services 85

8.2 Understanding products and services in context 86

8.3 Documentation 88

CHAPTER 9 Compliance Outside the Compliance Department 91

9.1 The Front Office 92

9.2 The Back Office and other support functions 93

CHAPTER 10 Key Compliance Department Activities 95

10.1 Routine activities 95

10.2 Off–Piste Compliance: advisory work 96

10.2.1 Understanding what it is all about 97

10.2.2 What are the regulatory implications? 99

10.2.3 Your plan of attack 105

10.3 Compliance conundrums 107

10.4 Dealing with a lack of cooperation 108

CHAPTER 11 Comply or Die When Things Go Wrong 111

11.1 Someone s watching you 113

11.2 The regulators have hot buttons 118

11.3 What the regulators can do to find out more 120

11.4 What to do if you are being investigated or are subject to disciplinary action 122

11.5 Consequences of rule breaches and other regulatory misdemeanours 124

APPENDICES

A Routine Compliance Activities 131

B Routine Anti–Money Laundering Activities 207

C Compliance in the Front Office 221

D Compliance for Senior Management, the Back Office and Other Support Departments 265

E Compliance Conundrums What Would You Do? 291

PART TWO COMPLIANCE PERSPECTIVES 333

Box 1: Acting on Principle 335

Box 2: ARROW 339

Box 3: Basel III and CRD IV 340

Box 4: Extradition 342

Box 5: Financial Services Action Plan 343

Box 6: Going Global? 345

Box 7: Industry Guidance 347

Box 8: L&G v. the FSA Who are the Real Winners and Losers? 349

Box 9: Markets in Financial Instruments Directive 350

Box 10: Money Laundering Statistics 353

Box 11: Prudential Regulation of Capital Adequacy 354

Box 12: The Enforcement Process Getting on the Wrong Side of the Regulators 356

Box 13: The Laundering Process 357

Box 14: Treating Customers Fairly 358

Index 361

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Annie Mills is an experienced compliance officer and has worked in many areas of investment management and banking compliance. She is currently Head of Compliance at Cantor Index & Cantor Fitzgerald Europe. Prior positions include Compliance Director (Internal Controls) at BGC Partners/Cantor Fitzgerald Group, and Senior Compliance Officer at Standard Bank.

Peter Haines is a chartered accountant with experience as a regulator and as a senior Compliance Officer and Money Laundering Reporting Officer. He has been a consultant since 2006, advising banks and investment firms, initially on compliance issues, but increasingly on governance and risk as well. Peter travels widely in this role and has gained experience in various US, European and Asian financial centres. He is now a non–executive director with a UK bank, chairing its Audit, Risk and Compliance Committee, and a Visiting Fellow at the ICMA Centre, University of Reading and Henley Business School.

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