Page 48 - February 20, 2025 Bulletin

6. Monitoring and Reporting: 9. Performance and Client Reporting:

• Establish regular audit mechanisms to ensure adherence • Maintain transparency and accuracy in reporting client
to policies and procedures. Regular audits and portfolio performance, avoiding misleading statements
assessments by independent parties (like internal or or omissions that could mislead clients.
external auditors) can help ensure compliance with
the policies and reveal any instances where conflicts of • Provide regular, detailed updates on portfolio
interest may arise. performance, any changes in strategy, and associated
risks.
• Implement automated systems for tracking transactions,
conflicts, and compliance breaches. 10. Ethical Culture:
• Cultivate an organizational culture that prioritizes
• Set up a whistleblower policy and confidential reporting
channels to allow employees to report unethical integrity, client interests, and ethical conduct at
behavior without fear of retaliation. all levels. Encourage ethical decision-making and
accountability in all staff.
7. Third-Party Due Diligence:
• The FI needs to ensure that compensation structures for
• Implement a robust process for conducting due financial advisors (including bonuses or performance
diligence on external partners, custodians, or other incentives) are aligned with client outcomes. Tying
service providers to ensure they also comply with these together rather than simply the bank's financial
fiduciary standards and regulations. performance can reduce the temptation to prioritize
bank interests.
• Establish written agreements with third parties that
clearly outline their fiduciary responsibilities and An effective compliance program must be dynamic and proactive
compliance obligations. in addressing potential risks and ensuring adherence to relevant
laws and regulations. It should include a robust framework
8. Regulatory Compliance:
for monitoring activities, detecting potential violations, and
• Having a team of knowledgeable professionals may addressing issues promptly. This involves internal audits, regular
be important in navigating the complex landscape risk assessments, and a clear process for reporting and resolving
of regulations governing investment management, compliance issues.Non-compliance with legal standards can
such as securities laws, anti-money laundering (AML) have far-reaching consequences for the FIs, including regulatory
regulations, and fiduciary responsibilities. sanctions, civil and criminal penalties, and damage to the FI's
reputation.
• Stay updated on local and international laws and
regulations.
• Ensure that compliance efforts evolve as new regulatory
changes or industry standards emerge.

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