A former Surrey police constable has pleaded guilty to two offences of misconduct in a public office and has admitted selling information, including details about footballer John Terry’s mother, to the Sun newspaper.
The Future of Compliance
Compliance functions as strategic partners in the new regulatory world
How regulated firms (re-)structure their Compliance functions to respond to, or preferably pre-empt, these complex challenges will encompass the range of culture, strategy and people. Not only the function’s composition, but also its role and voice within the business and overall risk management framework, should be considered.
Although it is difficult to quantify the value added by Compliance, fines and censure can highlight the potential cost of non-compliance. The number of regulatory disciplinary cases initiated by the FSA has increased over recent years – 66% in 2011 v 58% in 2010. In 2010/11 the FSA also issued a record level of fines – £98.5m. Over more recent months, substantial fines have also been levied by the FSA on firms for large-scale failures in controls and oversight. These statistics point towards increased regulatory expectations on firms.
An effective Compliance function is key to identifying and mitigating risk and protecting the business from regulatory censure and protecting brand and reputation.
Leading firms will see these external changes as an opportunity to enhance the value-adding aspects of Compliance. Seeing the potential, but also recognising the limitations, in their Compliance functions will help them in the pursuit of growth as well as dealing with threats, creating competitive advantage and improving corporate value and reputation in line with growing stakeholder demands around integrity, accountability and financial stability.
Edinburgh Solicitor jailed for money laundering
An Edinburgh solicitor has been jailed for four years for his role in the laundering of £1.8m. Richard Housley was also convicted of income tax fraud and a separate charge under POCA. Housley, the senior partner and MLRO, helped launder the money for Michael Voudouri, who pleaded guilty, but failed to turn up for the sentencing hearing: there is a warrant out for his arrest. Bookkeeper Caroline Laing also allowed her personal bank account to be used in the laundering scheme and was jailed for two and a half years.
Information security
Bring Your Own Device (BYOD) policies – what are they, and do you need one?
An increasing number of employers are finding that employees use their own smartphones, iPads, tablets, laptops and other devices to access work-related information.
Whereas a few years ago businesses tended to take a more restrictive approach and tried to limit access to devices owned or monitored by the employer, recently organisations are finding that there are benefits for everyone where employees are free to manage their workload flexibly with the devices that suit them best.
However, while research [http://www.ico.org.uk/news/latest_news/2013/survey-guidance-on-byod-personal-devices-07032013] shows that 47% of UK workers use their own devices for work purposes, less than 33% of those people say have had guidance from their employers on doing this.
Those who have been given guidance have probably been given a Bring Your Own Device (BYOD) policy. Ideally, BYOD policies should sit alongside existing policies on usage of IT, internet, email, data protection and, where appropriate, social media.
There are of course risks to bear in mind when employees use their own devices – after all, the device is owned, maintained and used by someone other than the IT department, so the employer does not have the same control as it may be used to. The employee may not be the only person to use the device (their family may also have access) so that needs to be considered. There is also the potential for a blurring of the lines between personal and business use when it comes to things like social media postings made on the employee’s own equipment.
What BYOD policies set out to do is ensure that employees are clear on the employer’s rules for using their own devices, for example information security – such as what happens if an employee downloads customer data on a device which isn’t properly secured. An employer will also want to specifically ensure that it has a right to access and wipe data on any devices which may contain work-related information.
The popularity of BYOD has led to the Information Commissioner’s Office (ICO) issuing specific guidance on this issue. In particular, the ICO following points should be addressed:
- Specific Guide = [http://www.ico.org.uk/for_organisations/data_protection/topic_guides/online/~/media/documents/library/Data_Protection/Practical_application/ico_bring_your_own_device_byod_guidance.ashx]
- Ensure that staff are clear on what data they can and cannot use on their personal devices
- Strong passwords should be used to secure all devices
- Ensure that appropriate facilities are in place to wipe or preserve confidentiality of data if a device is lost or stolen
We work with several organisations who have BYOD policies and have found the arrangement to work very well – employee feedback shows that they feel that it has a real benefit. It does however need to be managed carefully to balance making the rules clear with ensuring that the approach is not so draconian as to put employees off using it!
Duties of directors in Mauritius
The Financial Services Commission has issued a Circular Letter on 28 March 2013 to remind directors of their duties and obligations under the law. In fact, the directors are notified that upon providing their consent to act as director on a particular entity, they are confirming to adhere to all the laws and regulations under the Companies Act 2001. As such, under Section 143(1) of the Companies Act 2001, the directors are required to act in good faith and in the best interests of the company.
As major administrator of the company,
• a director shall always act in accordance with the law, and shall always exercise his duty with due care and honesty.
• Directors should also ensure that they do not put themselves in a position that will impair their ability to perform their functions properly.
The attention of the directors is also drawn to
• clause 2.7.8 of the Code of Corporate Governance, whereby the former should carry out their responsibilities diligently and they should also get their hands on the business.
• In addition, under clause 1.8 of the same code, the Financial Services Commission has the right to monitor and to keep close eyes on directors not adhering to the laws and to take the requisite action accordingly.
The Financial Services Commission has the right to consider whether the current directors or propose directors have the capacity and are/will be able to perform their duties in accordance with the law based on the following criteria:
• i.Qualification and experience: a director shall have the relevant qualification and experience to exercise sufficient care, diligence and skills for the good conduct of the business;
• ii.Independence of mind: a director shall act with integrity and freedom of mind, without any influence, interest or relationship that might impair his professional judgment or objectivity;
• iii.Judgment: a director shall be able to provide impartial and good judgment while excising his function.
• iv.Time Commitment: when a director serves on multiple boards, he shall ensure that sufficient time and attention is given to the affairs of each board he serves on. The director shall be adequately involved in the control and management of the company and shall perform his functions properly and efficiently.
It is expected that a director shall be able to demonstrate that he is and will be able to devote sufficient time to:
• adequately prepare for each board meeting;
• attend each board meeting including the annual general meeting;
• address the complexities and risks involved;
• actively participate in deliberations of the board meetings;
• adequately prepare for any board committee and can actively participate in the deliberations of the committee(s);
• be acquainted with the affairs and business of each licensee; and
• fulfill all his obligations and responsibilities in accordance with the requirements set out in the Companies Act 2001.
The following might be useful in assessing the time commitment:
• i.The number of working hours available for preparing and attending board meeting;
• ii.The availability of support staff;
• iii.The frequency of board meetings;
• iv.The size and complexity of the business;
• v.Other ancillary factors;
http://www.lexology.com/library/document.ashx?g=516bfe21-9134-4892-a253-05a201bb8702#page=1
Emery Mukendi Wafwana & Associates PC Rizwana Ameer Meea and Willy Bashiya Mbayi Mauritius
April 5 2013
Bank of England given power to regulate City
George Osborne to shrug off criticism that he is putting too much power into the hands of the Bank of England governor, reports the Guardian.
The chancellor will pledge on Tuesday to secure a “strong, safe and successful” financial industry for the UK as he tears up Labour’s regime for City regulation and puts the Bank of England at the heart of the new system.
Speaking alongside the outgoing Bank governor, Sir Mervyn King, George Osborne will shrug off criticism that he is putting too much power into the hands of the governor and his successors. Instead, Osborne will say that the previous system, under the Financial Services Authority, was discredited after the near-collapse of the banking industry in 2008.
Three new bodies will replace the FSA, in a move that Osborne will claim is “resetting the system of financial regulation in our country”.
King is also expected to address staff at the Prudential Regulation Authority, a new subsidiary of the Bank of England that now has oversight of the banking industry and is located just behind the landmark building in the centre of the City.
The Bank of England is also receiving formal powers for its Financial Policy Committee, which is being set up to look for any potential future bombs in the financial system and to defuse them.
It is made up of Bank of England executives and external members, and caused controversy last week by requiring certain banks, which it did not identify, to plug a £25bn shortfall in their capital. The PRA will now begin to hold conversations with individual banks – largely thought to include bailed-out Royal Bank of Scotland and Lloyds Banking Group – about how they intend to find the extra capital needed.
The third regulatory body, the Financial Conduct Authority, reopened on Monday inside the former FSA building. It will have responsibility for the industry’s behaviour and carry on the investigations into Libor fixing and misselling that have dominated the industry for the past year.
Osborne will say the changes “represent a fundamental change in how financial services will be regulated in the future”.
“They do away with the discredited system that failed to sound the alarm as the financial system went wrong, and put in its place a new system that puts the Bank of England back in charge and that will help ensure a strong, safe and successful financial system,” Osborne will say.
Labour created the FSA when it came to power in 1997, to unite the diverse self-regulatory bodies overseeing the City, and at the same time stripped the Bank of regulation of the banking industry.
David Kenmir, a PricewaterhouseCoopers financial services regulation partner, said the FCA needed to “overcome the breakdown in customer trust” between the industry and consumers.
“The financial services sector won’t just need to look at how to comply with the FCA’s expectations, but how to repair the breakdown in customer trust that has brought the new body into being,” said Kenmir, who was the chief operating officer at the FSA until 2010.
King is to be replaced by Mark Carney, head of Canada’s central bank, in July.
Gibraltar finalising EU corporate tax talks
Minor amendments will be required of Gibraltar’s Income Tax legislation to bring it in line with international best standards as assessed by the European Union’s Code of Conduct Group of Business Taxation, Gibraltar’s Chief Minister Fabian Picardo has said, reports Tax News.
Speaking to reporters in Brussels, Picardo was quoted by the Gibraltar Chronicle as saying: “I believe we are literally at the stage of final tweaking of words in an amendment that may affect one or two sections of the Income Tax Act.”
“I therefore expect that we will very shortly be putting a final draft to officials in the Code Group for an informal view. From the indications that we have, it will likely be a favourable one.”
The Code of Conduct Group’s assessment follows shortly on the heels of scrutiny of the Jersey, Guernsey and the Isle of Man’s zero-ten corporate tax regimes, which concluded with separate but identical rulings that their deemed distribution provisions were “harmful.” The provisions in question ensure that tax is paid on individuals’ holdings in profit-making companies as their respective holdings appreciate. Under the regime, a “deemed distribution” is presumed by the government and individual income tax is liable on the amount irrespective of whether a distribution has in fact been disbursed to the shareholder.
It is anticipated that after making the changes deemed necessary to its tax regime, Gibraltar’s corporate tax framework – as in the case of Guernsey, Jersey and the Isle of Man – will be formally endorsed by the Code of Conduct Group and subsequently European Finance Ministers, but not before, Picardo anticipates, a “politically-motivated” challenge from Spain.
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Firms expect cost of compliance to grow
The latest CBI/PricewaterhouseCoopers survey has shown a further improvement in business sentiment for this year but respondents admitted that this is tempered by uncertainty over returns on investments and the growing costs of regulation, reports the FT Adviser.
The 94th CBI/PwC financial services survey found life insurers have curtailed capital expenditure due to the postponement of the EU Solvency II directive.
The focus of IT investment in the industry has switched away from regulation and towards strategies intended to counter the effects of low growth, specifically customer acquisition and efficiency improvement.
Despite the fall in regulatory investment and the directive’s delay, almost all those surveyed expect ongoing compliance costs to grow as firms prepare themselves for ‘twin peaks’ regulation.
Furthermore, fund managers remain “remarkably confident”, thanks to good equity market performance and particularly strong retail business, but are concerned about regulation.
Anxiety about the impact of new initiatives has fallen slightly, but an increasingly large balance of respondents plan to spend more on compliance during the coming year. The visibility of new regulations may be improving – as illustrated by the recent issuance of AIFMD Level 2 guidance – but the costs of compliance remain significant, the survey said.
However, the survey shows a further improvement in business sentiment, matched by a recovery in business and top-line revenues.
The improvement in sentiment is also being felt far more widely across the industry than before. Banks and investment managers remain more optimistic than three months ago, while building societies and securities traders are enjoying renewed confidence.
In the latter two cases, the Bank of England’s Funding for Lending Scheme and the continued recovery in equity markets seem to have played a significant role.
Apart from insurers, all sectors report stronger business than in the previous quarter, and further improvements are forecast for the spring and early summer.
Confidence among UK financial services firms continues to grow, building on the sharp upswing recorded in the last survey. Aggregate volumes of business have recovered too, suggesting that trading conditions are catching up with the industry’s improving sentiment.
The survey said: “These represent some of the most positive overall responses to emerge from the survey in recent years.”
The CBI/PwC Financial Services Survey is a quarterly trends report that discusses the health, perceptions and plans of the UK financial services industry.