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Essential Strategies for Financial Services Compliance, 2nd Edition



Essential Strategies for Financial Services Compliance, 2nd Edition

Annie Mills, Peter Haines

ISBN: 978-1-118-90619-4 October 2015 400 Pages

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A fully updated edition of the definitive guide to financial regulation

In recent years, not only has the compliance field become firmly established, but it has seen staggering growth, thanks to never-ending changes in the regulatory environment. As regulation increases still further, the demand for clear guidance on navigating daily compliance issues is greater than ever. Now in its second edition, the highly successful Essential Strategies for Financial Services Compliance has been updated with the latest compliance strategies and regulatory information, making it indispensable for compliance officers, legal firms, and anyone else working with the financial services compliance function.

Non-compliance represents a significant material risk for any financial services firm that fails to understand and appropriately apply regulatory standards. This Second Edition of Essential Strategies for Financial Services Compliance makes it easy to digest complex information on the regulatory framework. But this book is far from solely theoretical. A balanced approach means that both the concepts and their application are within reach. Annie Mills and Peter Haines deliver solid advice that can be applied on a day-to-day basis to manage any compliance issues that may arise. Read this book to:

  • Understand the conceptual basis of compliance and the current regulatory environment applicable to the financial services industry
  • Quickly and thoroughly learn the accepted best practices for everyday compliance
  • Get up to date information on the current financial regulatory environment with this new edition
  • Reference detailed advice as issues arise in day-to-day operations

This update to the popular first edition of Essential Strategies for Financial Services Compliance will help eliminate non-compliance risk and ensure that your firm is entirely current on its ability to navigate the maze of financial services regulation.

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


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


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


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