All regulated financial institutions in Singapore are required to ensure they have suitable compliance arrangements in place to assist in meeting regulatory requirements. Licensed entities in Singapore, upon receiving their licence, will be required to put in place appropriate compliance policies and procedures and maintain appropriate compliance framework to continue meeting regulatory obligations. There are often ongoing regulatory requirements such as:
- Financial and capital requirements
- Business conduct requirements
- Risk management
- Code of conduct
- Corporate governance
- Anti-Money Laundering / Countering Financing of Terrorism (“AML/CFT”) requirements
Suitable Compliance Arrangements
Compliance arrangements for financial institutions can take many forms. Capital market services licence holders are in general required to put in place dedicated compliance officer in house or dedicated compliance resource from related corporation (including parent entity). Capital Market Services Licence holders conducting fund management activities and are managing assets less than S$1 billion, registered fund managers and venture capital fund managers are able to outsource their compliance function to third party service providers such as Argus Global Pte. Ltd. Similarly, financial institutions conducting payment services under the Payment Services Act are required to put in place in house compliance support or obtain suitable compliance support from related entities provided appropriate oversight is given from senior management based in Singapore. Outsourcing of some aspects of compliance is permitted for financial institutions licensed under the Payment Services Act, subject to MAS’ approval. Most exempt entities such as the exempt corporate finance advisors, and exempt financial advisers are also able to outsource their compliance obligations to third party service providers.
Many regulated financial institutions who have in house compliance support may also choose to engage outsourced third-party service providers for several reasons such as:
- Obtain professional advice on compliance matters
- To be an additional resource to aid the existing in-house compliance team
- Be a sounding board to work through some new regulations and put in place appropriate procedures
- To obtain industry expert knowledge
- To understand industry best practices
- To obtain independent advice
- To ensure continuity especially with staff movement
- To provide cost efficiency
Scope of works for Outsourced Arrangements
Third party outsourced service provides can assist regulated firms in myriad of ways. Outsourced compliance arrangements can be tailored to suit each financial institutions’ needs and arrangements should commensurate with nature and size of business.
In general, outsourced compliance service providers can assist in the following manner:
- Tailor compliance policies and procedures to suit financial institutions’ business nature and activities conducted
- Provide assistance in giving ad hoc regulatory advice and interpretation of regulations
- Drafting and reviewing of regulatory communications and assisting to correspond to regulators
- Providing independent compliance report to be presented to board of directors to highlight significant compliance matters
- Assist to build and implement a compliance monitoring plan and compliance calendar to ensure financial institutions do not breach any regulatory requirements
- Assist in mitigating any regulatory breaches
- Assist in mitigating statutory and/or internal audit findings
- Assist with Monetary Authority of Singapore (“MAS”) inspections and findings
Secondment services is where an employee of the third-party outsourced compliance service provider is assigned to a financial institution for a specific purpose or a specified time period. This is typically useful for financial institutions wherein they need additional resources for a specific project or for a specific time period. Often compliance secondments are needed by financial institutions to fill in the gap and ensure continuity in instances where in-house compliance officer has left and the new compliance officer will be joining at a later stage. Compliance secondment services are also useful for financial institutions who may be tasked to handle some specific compliance tasks such as conducting an overall AML/CFT periodic reviews of all customers.
It is important to identify your compliance needs and seek out suitable arrangements.
How can Argus Assist?
We, at Argus Global, are a team of consultants who specialize in regulatory compliance for financial institutions. We assist to do the following:
- Provide outsourced compliance services
- Provide secondment compliance services
- Internal audit services
- Compliance Training
Please reach out to us for an initial discussion on Compliance Outsourcing at firstname.lastname@example.org.
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