2022 checklist: Are you compliance ready?

An ongoing focus on good governance, leadership obligations and the senior manager conduct rules means that training for partners and directors has never been more important. Schedule continuing education and training for yourself, your compliance colleagues, and your investment staff in 2022.

4. Post-Brexit

Doing business in Europe: On December 31 2020, UK businesses lost existing passporting rights to offer their products and services across other European Economic Area jurisdictions. Most businesses are now familiar with dealing with a patchwork of local restrictions and requirements, for example through the national private placement regime. 

Updating your compliance framework: After 47 years inside Europe, the UK has re-created a stand-alone legislative framework – a process known as on-shoring. The FCA in turn revised its handbook to take account of this new orientation. Businesses have until March 31 2022 to comply with the post-Brexit rulebook. Use this remaining period to update all your compliance documents to reflect the new requirements.

5. Training: This is an area that is critically important for all financial services companies but is where we see many making basic mistakes, from record keeping to content specificity during our reviews. Training must not be a tick-box exercise, it is the foundation to a business's overall culture. Training should be designed appropriately for the business's operations, compliance obligations and risks, and should be well executed and documented.

As employees continue to work from home, training to avoid falling foul of cybercrime is even more vital. Vulnerability to cyber attacks is much higher at home without tighter surveillance and software that naturally comes from being in the office.

6. Financial promotions, marketing, and advertising materials: Re-assess your processes to ensure your marketing activities and promotions are fair, clear and not misleading. Regulations around materials are both complex and subjective. Understand how to identify compliance risks that could lead to problems with key stakeholders: investors, allocators and regulators. This includes subtle distinctions between pre-marketing and full engagement, and what the requirements are for each. Consider adopting a marketing review solution in 2022 to streamline your marketing compliance.

Additionally, the Securities and Exchange Commission has approved a number of changes to Rule 206(4)-1 under the Investment Advisers Act 1940, known as the new 'marketing rule'. All SEC-registered investment advisers need to start considering an implementation plan for the new marketing rule. Businesses have until November 4 2022 to comply with the new marketing rule, however, advisers are encouraged to start training staff on the new requirements as well as make the requisite changes to marketing content before the compliance date.

7. Anti-money laundering: The FCA’s Business Plan for 2021-22 once again put AML at the top of its regulatory priorities and a number of high-profile enforcement cases emphasise that they will not tolerate inadequate controls and processes in this area. We have also seen a new focus on the role of the money laundering reporting officer, with the FCA emphasising its pivotal role on managing the risks of financial crime inside businesses.