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Compliance Training for Financial Institutions in New Zealand: A Risk-Based Approach
The Financial Markets Authority (FMA) takes a risk-based approach to monitoring and surveillance activities, prioritizing resources on participants or practices that pose the greatest risk to fair, efficient, and transparent financial markets.
Our Compliance Strategy
Our compliance strategy focuses on lifting standards for businesses and professionals we regulate, fostering a culture where market participants proactively manage and monitor compliance. We recognize that complying with financial regulations imposes costs, but weak regulation can harm investor confidence and informed participation.
Tools to Reduce Regulatory Burden
To achieve a balance between regulation and business activities, the FMA uses various tools to reduce unnecessary regulatory burden, including:
- Legislative notices
- Exemptions
- Designations
- Frameworks
- Methodologies
- Levy waivers
- Public accountability notices
- Guidance documents
Monitoring Activities
Our monitoring activities fall into three categories:
Responsive Monitoring
- Identifying non-compliance and taking timely action to address it
Thematic Monitoring
- Focusing on specific areas of risk or concern, such as anti-money laundering or insider trading
Planned Monitoring
- Regularly scheduled visits to ensure compliance with regulatory requirements
Enforcement Action
Where non-compliance is identified, we use a range of tools to deliver a timely, effective, and proportionate response, including:
- Further inquiries
- Adjustments to compliance
- Notices
- Warnings
- Directions
- Enforceable undertakings
- Suspension or removal of licenses
- Enforcement action
Licensing Approach
Our licensing approach is risk-based, applying greater scrutiny to applicants who may present the greatest harm. Clear licensing guides are essential to facilitate efficient applications, and we continually work to improve these guides.
Regulatory Returns
When developing regulatory returns, we prioritize reducing burden by:
- Seeking information from other sources
- Only asking for information intended to be used
- Consulting with market participants
- Seeking feedback on our regulatory return process
Functions and Powers
The FMA has a wide range of functions and powers under the Financial Markets Conduct Act 2013 (FMC Act) to achieve its statutory objectives.
Evaluation of Progress
We evaluate our progress through the Ease of Doing Business Survey, which helps us understand the impact of our work on market participants and stakeholders. The survey informs our approach to continuous improvement in effectiveness and efficiency.
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