Financial Crime World

Ensuring Compliance Function Has Necessary Authority and Remedies

Financial undertakings must ensure that their compliance functions have the necessary authority and remedies to fulfill their duties. This is a crucial aspect of maintaining financial stability, as emphasized by the Financial Supervisory Authority (FME).

Defining Procedures for Compliance Function

According to FME’s guidelines, it is essential that financial undertakings define specific procedures within their organization that outline the authorizations and measures of the compliance function. These procedures should be developed in collaboration with the CEO and approved by the latter before being presented to all business unit managers.

  • Key aspects:
    • Procedures must be defined within the organization
    • Developed in collaboration with the CEO
    • Approved by the CEO before presentation to business unit managers

Information to Employees

Employees who handle securities trading and are subject to supervision by the Compliance Officer must be informed of these procedures upon commencing employment and any subsequent modifications.

  • Key aspect:
    • Employees handling securities trading must be informed of procedures upon commencing employment and subsequent modifications

Authority of Compliance Officer

The guidelines also stress the importance of ensuring that the Compliance Officer has the right to demand improvements within specific business units if deemed necessary. In such cases, the officer may raise objections to an employee’s working practices and direct demands for improvements to the relevant manager.

  • Key aspects:
    • Compliance Officer has authority to demand improvements
    • Right to raise objections to employee’s working practices
    • Direct demands for improvements to relevant manager

System for Following Up on Demands

FME recommends that financial undertakings establish a system to follow up on demands for improvements and/or objections, ensuring that obligations under laws and rules are fulfilled at all times.

  • Key aspect:
    • Establish a system for following up on demands
    • Ensure compliance with laws and rules

Reporting Compliance Issues

The guidelines also emphasize the importance of regular reporting to senior management on compliance issues. The Compliance Officer is responsible for all reporting, which should include written reports on compliance issues at least once each year.

  • Key aspects:
    • Regular reporting to senior management
    • Written reports on compliance issues at least once each year

Welcome Response from Industry Experts

FME’s recommendations have been welcomed by industry experts, who argue that they will help strengthen financial stability and reduce the risk of non-compliance. “It is essential that compliance functions within financial undertakings have the necessary authority and remedies to fulfill their duties,” said a spokesperson for FME.

Contact Information

Financial Supervisory Authority (FME) Phone: +354 570 7300 Email: info@fme.is