Essential Strategies for Financial Services Compliance

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.

• Acknowledgements ixList of Abbreviations xiPreface (Or, How Not to be an Execution Officer) xviiForeword to the First Edition xxiForeword to the Second Edition xxiiiPart One Commentary and Context 1Chapter 1 The UK Regulatory Environment 31.1 Regulation in the UK 31.2 Different regulatory regimes in the UK 51.3 The FSMA regime for investment business 51.4 The UK’s anti-money laundering regime 111.5 The UK’s takeover regime 131.6 Other UK regulatory regimes 13Chapter 2 The Compliance Function 152.1 Compliance as a concept 162.1.1 What is Compliance? 162.1.2 Who is responsible for Compliance? 192.1.3 Different Compliance models 212.2 The Compliance Officer 222.2.1 Key responsibilities of the Compliance Officer 222.2.2 What are the characteristics of a good Compliance Officer? 242.3 Compliance: good and bad 262.3.1 What are the characteristics of a good Compliance regime? 262.3.2 What are the characteristics of a bad Compliance regime? 302.3.3 Danger signals 322.4 The argument for Compliance 332.4.1 What are the benefits of Compliance, regulation and the Compliance Officer? 332.4.2 What are the costs of Compliance? 402.5 Compliance as a profession 41Chapter 3 The Compliance Contract 453.1 The Compliance Mission Statement 463.2 The Compliance Charter 473.2.1 Contents of a Compliance Charter 47Chapter 4 Mapping Your Compliance Universe 53Chapter 5 Mapping Your Corporate Universe 575.1 Operating entities 575.2 Business units 615.3 External Service Providers 66Chapter 6 Regulators and Other Industry Bodies 696.1 Exchanges 706.2 Clearing houses 76Chapter 7 The Legislative Environment and Rules Mapping 777.1 Rules mapping 797.2 Detailed rules mapping for your own firm 797.3 Rules mapping for an overseas jurisdiction 82Chapter 8 Financial Products, Services and Documentation 858.1 Products and services 858.2 Understanding products and services in context 868.3 Documentation 88Chapter 9 Compliance Outside the Compliance Department 919.1 The Front Office 929.2 The Back Office and other support functions 93Chapter 10 Key Compliance Department Activities 9510.1 Routine activities 9510.2 Off-Piste Compliance: advisory work 9610.2.1 Understanding what it is all about 9710.2.2 What are the regulatory implications? 9910.2.3 Your plan of attack 10510.3 Compliance conundrums 10710.4 Dealing with a lack of cooperation 108Chapter 11 Comply or Die – When Things Go Wrong 11111.1 Someone’s watching you 11311.2 The regulators have ‘hot buttons’ 11811.3 What the regulators can do to find out more 12011.4 What to do if you are being investigated or are subject to disciplinary action 12211.5 Consequences of rule breaches and other regulatory misdemeanours 124AppendicesA Routine Compliance Activities 131B Routine Anti-Money Laundering Activities 207C Compliance in the Front Office 221D Compliance for Senior Management, the Back Office and Other Support Departments 265E Compliance Conundrums – What Would You Do? 291Part Two Compliance Perspectives 333Box 1: Acting on Principle 335Box 2: ARROW 339Box 3: Basel III and CRD IV 340Box 4: Extradition 342Box 5: Financial Services Action Plan 343Box 6: Going Global? 345Box 7: Industry Guidance 347Box 8: L&G v. the FSA – Who are the Real Winners and Losers? 349Box 9: Markets in Financial Instruments Directive 350Box 10: Money Laundering Statistics 353Box 11: Prudential Regulation of Capital Adequacy 354Box 12: The Enforcement Process – Getting on the Wrong Side of the Regulators 356Box 13: The Laundering Process 357Box 14: Treating Customers Fairly 358Index 361