Is compliance outsourcing right for your firm?
Companies (or firms) regularly re-assess, implement and, outsource their APAC compliance arrangements, relying in part on a third-party provider or outsourcer. This means firms need to effectively manage these providers to reduce the risk of operational disruption and harm to their consumers.
The regulator does expect authorised companies to be compliant of course. How they achieve this, is from the top down. Corporate governance must be robust, operationally resilient and have a comprehensive understanding and mapping of the people, processes, technology, facilities, and information necessary to deliver each of your important business services, which includes people (internal and external) and other dependencies such as third parties. A key reminder for authorised companies is that they must assess the risks and controls in place to ensure it is operationally resilient.
Compliance support options to consider
First, it must be clear that there is no regulatory requirement for a company to use compliance consultants. It is simply another service option. If a company does decide to get compliance support, it must be done with due consideration and it is important to consider what type of support the company needs and to then establish the type and level of service the company requires.
There are many different levels of service available. It is important to ensure that the service the company chooses addresses your company-set objectives and ensures your company is compliant. For example, some services include licence application, drafting or reviewing procedures, file audits, technical support and training.
Once a decision has been made to use outside support, the company must consider using an appropriate level of service. Different companies have different requirements, so it is important to purchase what is relevant to your business.
Most important factors to consider for compliance outsourcing
Remember, the relationship and extent of the services provided should be driven by your company and more importantly, how your company will monitor the quality and appropriateness of the services provided. We have set out below two significant factors to consider when looking at outsourcing:
- Your company cannot outsource your company or its senior management regulatory obligations and the responsibility for oversight remains with your company.
- Compliance is your company’s responsibility, if the regulator finds inadequate controls in your company, the regulator may take action against your company, not the outsourced company.
Companies must either ‘comply or explain’, meaning you are required to do something or explain why you did not do anything.
Material, critical or important outsourcing notifications
The company must still consider the MAS obligations on outsourcing, especially the due diligence and risk assessment. Not only at the start but on an ongoing basis.
Consideration must be given to the following:
- Intra-group outsourcing is something that some companies have adopted, however, this may not always cover the full requirements and outsourcing on some elements is still needed.
- This does include general outsourcing and data security requirements, managing the amount of data being stored, processed or transmitted by third-party providers on behalf of your company and how critical to operations that data is (e.g., including how companies configure and monitor their services to reduce security and compliance incidents.)
- Any outsourced function must implement an appropriate level of security to protect outsourced data (personal, confidential, commercial etc), including for relevant data protection requirements and other guidelines that are separate from the MAS regulations.
- Risk management will be key, the company must have appropriate risk management systems and controls to manage the risks associated with the provider services (e.g., Systems and Controls etc). As a reminder, the company is responsible and accountable for all the regulatory responsibilities that apply to outsourcing and third-party service arrangements, the company cannot delegate any part of this responsibility to a third party.
Why choose an outsourced compliance consultant?
If your company accepts all the above considerations, an outsourced compliance consultant will be a subject matter expert to provide you with an independent and objective view. Those tasks relevant to your company can be delegated to a consultant who can draw on their experience to perform those ad hoc tasks that your company does not have the time or resource to do. These can include full application for authorisation or amendments or advising on how to deal with specific cases (e.g., complaints or high-risk customers). Most support services also include Annual AML and audits projects as part of the engagement.
A significant benefit of using an outsourced service provider is that they will keep you up to date in a simple one summary form, helping you to understand the regulations and how they are to be implemented practically within the industry.
Outsourced support can be a bespoke service and you may choose a complete governance support, or only specific sections; each service can be built to suit your needs.
How can Waystone Compliance Solutions assist?
Waystone Compliance Solutions can provide as much or as little support you require, as a ‘one off’ support service or on a more regular basis. We work with clients to help protect their business.
As the regulations become more complex, your company must adhere to more and more reporting and other obligations. To have confidence in your compliance processes is crucial.
Waystone Compliance Solutions provides a review and suggestions for remediation should it be necessary, in line with your business model. Waystone Compliance Solutions can also assist with providing you with a robust template to formulate your business model.
It is essential to have a plan in place for your compliance obligations, particularly with regard to the upcoming Business Continuity regulations that come into force in June 2023 . Our team of experienced compliance consultants can assist you with all aspects of this important regulation.
If you would like to discuss any of these matters further, please reach out to your usual Waystone Compliance Solutions representative or contact us below.