Moonstone: Compliance officer obligations
If you are required to appoint a compliance officer, whether internal or external, your annual report is due by no later than the 15th of August.
The FSB’s presentation on the duties and obligations of compliance officers which was recently published on their website contains important pointers to assist readers in learning from the mistakes of others. We list hereunder some aspects for you to consider.
Compliance Officer Contract
When an FSP wants to appoint a compliance officer, such appointment must be approved by the FSB. The fact that the appointee complies with the requirements laid down by the Registrar is not enough – one has to apply for appointment and approval to the FSB in the prescribed manner.
The Registrar also lists instances where compliance practices appoint COs who have not been approved by the FSB, and then delegates the duties of the approved CO to these individuals. You may verify on the FSB’s website to make sure that your CO has been approved.
Once approved, the roles and responsibilities of all the parties have to be confirmed in service level agreements, including the legislation for which the CO is responsible.
The FSB pointed out that it happens somewhat frequently that COs cease rendering compliance services but fail to notify the Registrar of the resignation. There is an obligation on the CO who resigns to submit a termination report to the FSB.
Which CO is responsible for what compliance report?
A CO who was still in service at the end of May this year, for instance, is obliged to complete the compliance report for that reporting period. We have heard of FSPs who wished to change their compliance service provider, but who were advised that termination of the contract would result in their compliance reports not being completed and submitted. Such action would contravene the regulations.
Negligence of Prescribed duties
The FSB reports that they came across instances where no formal feedback was given to FSPs on at least a quarterly basis. In other cases the feedback was not FSP specific but general feedback for all FSPs. This would inevitably happen where the client base was too big for the CO to handle.
Another example of problems that can be related to the same cause is where frequent email and telephonic interaction takes the place of formal feedback. Such activities do not replace the prescribed reporting duties.
Yet another problem which can be ascribed to this is where on-site visits to the premises of the FSP does not take place or is replaced with electronic monitoring.
If you have any concerns about issues raised above we suggest you discuss it with your CO. Please click here to download and read the full presentation.
