The document discusses regulatory compliance in the financial services industry. It provides information on surveys conducted on the role and challenges of compliance. Key findings include that the majority of respondents agree that the compliance function should identify all business activities susceptible to compliance risk. It also discusses the typical responsibilities of a compliance officer, such as maintaining compliance files, providing training and advice, monitoring controls, and reporting. It emphasizes that while compliance officers play an important role, ultimate responsibility for compliance lies with senior management.

1. Demystifying
Regulatory Compliance
David Galea Souchet
Vice president MACO

2. Summary Report Survey: The Role and the
Challenges of the Compliance – Sample Size 32
Area of Employment
Other: 9.38%
Insurance:
25.00%
Other Financial
Services: 18.75%
Banking:
12.50%
Insurance 25.00% 8
Investments 34.38% 11
Banking 12.50% 4
Other FinancialServices 18.75% 6
Other (Please Specify) 9.38% 3
Total Responses 32
Skipped 0
Investments: 34.38%

3. Summary Report Survey: The Role and the
Challenges of the Compliance
The Compliance Officer must define and understand the DNA of the company.

4. Summary Report Survey: The Role and the
Challenges of the Compliance
Compliance, is the combination of all processes which enable a
company to ensure respect for the values and ethics as installed by
management.

5. Summary Report Survey: The Role and the
Challenges of the Compliance
The Compliance function is a key function that should identify all areas of
business activity of the licenced entity that are susceptible to compliance risk
and implement the necessary controls to ensure that the undertaking complies
with the applicable laws and regulatory requirements.
Strongly
Agree
78.12% 25
Agree 21.88% 7
Disagree 0.00% 0
Strongly
Disagree
0.00% 0
Total
Responses
32
Skipped 0

6. Summary Report Survey: The Role and the
Challenges of the Compliance
The Compliance function is a key function that should identify all areas of
business activity of the licenced entity that are susceptible to compliance risk
and implement the necessary controls to ensure that the undertaking complies
with the applicable laws and regulatory requirements.
Strongly
Agree
78.12% 25
Agree 21.88% 7
Disagree 0.00% 0
Strongly
Disagree
0.00% 0
Total
Responses
32
Skipped 0

7. Summary Report Survey: The Role and the
Challenges of the Compliance
Scale the importance of the following for the compliance function: 1lowest
10 highest proper
monitoring of all
distribution
channels and
third party
service providers
used by the
undertaking
reporting and
public
disclosure
requirements
compliance with
general good
provisions
imposed by host
jurisdictions
when an
passporting.

8. Summary Report Survey: The Role and the
Challenges of the Compliance
Compliance should develop a compliance plan that details the work to be
undertaken during the forthcoming business year and ensuring that all areas of
business activity that are susceptible to compliance risk are addressed.

9. Summary Report Survey: The Role and the
Challenges of the Compliance
Scale the importance of the following for the compliance function: 1lowest
10 highest
Procedures Cont. Training Must be reported up services and
Markets In plans and Regulations

10. Summary Report Survey: The Role and the
Challenges of the Compliance
Compliance should be a profession based on objective criteria not just a
function authorised by the MFSA through the company one works in.
Strongly
Agree
56.25% 18
Agree 34.38% 11
Disagree 9.38% 3
Strongly
Disagree
0.00% 0
Total
Responses
32
Skipped 0

11. Summary Report Survey: The Role and the
Challenges of the Compliance
The authorisation should be based on more Objective criteria such as:
• A list of Approved Qualifications (which should not be exhaustive)
• Fixed years of Experience (eg. 2 – Years – Junior, 4 Years Senior)
Agree 46.88%
Strongly Agree 31.25% 10
Agree 46.88% 15
Disagree 9.38% 3
Strongly Disagree 0.00% 0
Other (Please Specify) 12.50% 4
Total
Responses
32
Skipped 0

12. Comments
• It is important to develop an open dialogue with financial supervisors, above all when difficulties
in implementation arise.
• processing time on applications could be better
• More training courses relating to compliance to enhance our day to day knowledge and
awareness
• Compliance should not be seen as a simple tick box function to satisfy regulatory requirements,
but an important function which its main aim is to preserve
• the company's reputation.
• Attendance to board meetings needed
• Good communication skills.
• It is becoming increasingly difficult for new individuals to become eligible to act as Compliance
Officers. Hence, objective criteria would provide more clarity for new licence holders to find a
suitable compliance officer and for existing licence holders to replace a departing compliance
officer.
• The MFSA should perform a face to face interview with any prospective compliance officer
especially given the fact that licensed institutions are being so much relied up on these days.
• Compliance should form part of the executive management team as it plays an important role in
the whole set up of the business. It should not be considered only as a source of approval for
business initiatives but more ingrained in the setting up of such initiatives from inception.

13. Comments
• Education should not only be the prerequisite but experience should be considered more
important and business focussed.
• The scope of compliance should not be limited only to the regulatory requirements but should
encompass other aspects that could be not captured via regulations.
• Many a times the work is carried out by a team and not one single individual. The MFSA should
consider this and not ask about the time of an individual acting as the main compliance officer.
• having too rigid objective criteria might be counterproductive, and there should always be an
element of flexibility depending on the size of the licensed entity, any other relevant experience
by the proposed CO.
• Compliance are double-hating business operational roles which may be conflicting. This should be
monitored and enforced by the Regulator to avoid possible conflicts.

14. What is Regulatory Compliance?
Compliance
Department
Compliance
Culture
Compliance
Officer
Compliance
Function
Compliance
Risk

15. Definition of Compliance risk
The risk of legal or regulatory sanctions, material
financial loss, or loss to reputation a bank may
suffer as a result of its failure to comply with laws,
regulation, rules, related self-regulatory
organisation standards, and codes of conduct
applicable to its banking activities*
*Basel Committee on Banking Supervision

16. Who is responsible for Compliance?
• Is the compliance officer/department responsible for
compliance?
• Not exactly – but clearly the compliance function has a
very important role to play
• Senior management is responsible for compliance
• The overarching role of compliance is to identify,
manage and mitigate compliance risk

17. Responsible Senior Management or Compliance?
Compliance Officer
Detailed role in day to day compliance
such as compliance monitoring
Liaising with MFSA on an ongoing basis
Providing regulatory advice and guidance
Providing training
Reporting to senior management and the
Board on compliance matters
Senior Management
• Ensuring that the company has the
right compliance culture which is
embedded in its corporate
infrastructure
• No or little hands on involvement in
dealing with compliance matters
• Assessing the work of the compliance
function
• Receiving reports from the
compliance officer

18. How do we identify compliance risk?
• Understanding the business and mapping and
documenting the compliance universe
• Understand how your firm is positioned, such as:
 Operating entities with the group;
 Business units within the firm;
 Stakeholders such as service providers;
 Regulatory environment –
regulators/legislation/regulations etc
 Products and services

19. Rules mapping
Determine and document:
• the requirements your firm needs to comply with now
(to be included in compliance manual and policies and
procedures)
• How planned changes in your firm’s activities will be
affected by current regulations (for example a change in
services/products)
• How planned changes in regulations will impact your
firm

20. Typical role and responsibilities of a compliance
officer
• Creating and maintaining a thorough understanding of the
company
• Maintaining complete and up to date compliance files
• Compliance and rules mapping
• Creating and maintaining a compliance manual, regulatory
policies and procedures
• Providing compliance advice and training
• Identify and assess compliance risk throughout the firm –
Assess impact and probability
• Carrying out monitoring of controls that are in place to mitigate
compliance risk
• Preparing and implementing an annual compliance plan

21. Typical role and responsibilities of a compliance
officer - continued
• Suggesting corrective actions to be taken in relation to
weaknesses identified and following up on corrective
action
• Dealing with rule breaches and complaints from clients
and maintain up to date registers
• Reporting to senior management and the board of
directors on compliance matters
• Approving marketing communications
• Keeping an open communication with MFSA and drafting
letters and following up with the regulator
• Participating in supervisory visits by the MFSA

22. Compliance operational arrangements
• Compliance must be independent from the
other business units/teams especially those in
core functions such as investment services
• Compliance function should be permanent
• Appropriate staffing arrangements: adequate
capacity, qualifications and experience
• Adequate resources including IT and space

23. What makes a good compliance officer?
• Confident – able to be firm and a person with
authority
• Able to communicate effectively with the
business at al levels
• Good knowledge of the business
• Analytical
• Eye for detail and be sceptical when required
• Able to say No even when under pressure to
say Yes

24. What makes a good compliance officer? - continued
• Good reporting skills – compliance matters can
be put forward in a way that is easy to
understand
• Able to make a decision promptly/be
responsive
• Up to date with rules and regulations
• Gravitas and patience – compliance can take a
while to sink in

25. Benefits of good compliance
• Governance – enhanced internal control and process
efficiency, better accountability, improved reporting
• Clients – customers get a fair deal. An improved client
service through loyalty and trust means potentially
increased business
• Financial – less likely to lose money through
compensation to customers and less and lower fines
• Reputation – clients, regulator, media

26. Thank you!