19 Compliance function

Investment firms should establish a permanent and effective compliance function to manage compliance risk, and should appoint a person to be responsible for this function across the entire investment firm (the compliance officer). The compliance function, policies and procedures should also be compliant with Article 22 of Commission Delegated Regulation (EU) 2017/565 and ESMA guidelines on the compliance function.

The role of compliance officer, taking into account the principle of proportionality as set out in Title I, can be combined with the head of the RMF or, where it is not proportionate to appoint a person who is dedicated only to this function, can be performed by another senior person (e.g. head of legal), provided there is no conflict of interest between the tasks performed.

Staff within the compliance function should possess sufficient knowledge, skills and experience in relation to compliance and relevant procedures, and should have access to regular training.

The management body in its supervisory function should oversee the implementation of a well-documented compliance policy, which should be communicated to all staff. Investment firms should set up a process to regularly assess changes in the law and regulations applicable to its activities.

The compliance function should advise the management body on measures to be taken to ensure compliance with applicable laws, rules, regulations and standards, and should assess the possible impact of any changes in the legal or regulatory environment on the investment firm ’s activities and compliance framework.

The compliance function should ensure that compliance monitoring is carried out through a structured and well-defined compliance monitoring programme and that the compliance policy is observed. The compliance function should report to the management body and communicate as appropriate with the RMF on the investment firm ’s compliance risk and its management. The compliance function and the RMF should cooperate and exchange information as appropriate to perform their respective tasks. The findings of the compliance function should be taken into account by the management body and the RMF in decision-making processes.

Investment firms should take appropriate action against internal or external behaviour that could facilitate or enable fraud, ML/TF or other financial crime and breaches of discipline (e.g. breaches of internal procedures or breaches of limits).

Investment firms should ensure that their subsidiaries and branches take steps to ensure that their operations are compliant with local laws and regulations. If local laws and regulations hamper the application of stricter procedures and compliance systems implemented by the group, especially if they prevent the disclosure and exchange of necessary information between entities within the group, subsidiaries and branches should inform the compliance officer or the head of compliance of the Union parent undertaking.