1A firm must establish, implement and maintain adequate policies and procedures sufficient to ensure compliance of the firm including its managers, employees and appointed representatives (or where applicable, tied agents)3 with its obligations under the regulatory system and for countering the risk that the firm might be used to further financial crime.2

[Note: article 13(2) of MiFID]2

A common platform firm must, taking into4account the nature, scale and complexity of its business, and the nature and range of investment services and activities undertaken in the course of that business, establish, implement and maintain adequate policies and procedures designed to detect any risk of failure by the firm to comply with its obligations under the regulatory system, as well as associated risks, and put in place adequate measures and procedures designed to minimise such risks and to enable the FSA to exercise its powers effectively under the regulatory system and to enable any other competent authority to exercise its powers effectively under MiFID.

[Note: article 6(1) of the MiFID implementing Directive]

A common platform firm must maintain a permanent and effective compliance function which operates independently and which has the following responsibilities:

1. (1)

   to monitor and, on a regular basis, to assess the adequacy and effectiveness of the measures and procedures put in place in accordance with SYSC 6.1.2 R, and the actions taken to address any deficiencies in the firm's compliance with its obligations;

2. (2)

   to advise and assist the relevant persons responsible for carrying out regulated activities to comply with the firm's obligations under the regulatory system.

[Note:

article 6(2) of the MiFID implementing Directive]

In order to enable the compliance function to discharge its responsibilities properly and independently, a common platform firm must ensure that the following conditions are satisfied:

1. (1)

   the compliance function must have the necessary authority, resources, expertise and access to all relevant information;

2. (2)

   a compliance officer must be appointed and must be responsible for the compliance function and for any reporting as to compliance required by SYSC 4.3.2 R;

3. (3)

   the relevant persons involved in the compliance functions must not be involved in the performance of services or activities they monitor;

4. (4)

   the method of determining the remuneration of the relevant persons involved in the compliance function must not compromise their objectivity and must not be likely to do so.

[Note:

article 6(3) first paragraph of the MiFID implementing Directive]

1. (1)

   4A firm which is not a common platform firm and which carries on designated investment business with or for retail clients or professional clients must allocate to a director or senior manager the function of:

   1. (a)

      having responsibility for oversight of the firm's compliance; and

   2. (b)

      reporting to the governing body in respect of that responsibility.

2. (2)

   In SYSC 6.1.4A R (1) compliance means compliance with the rules in:

   1. (a)

      COBS (Conduct of Business sourcebook);

   2. (b)

      COLL (Collective Investment Schemes sourcebook) and CIS (Collective Investment Schemes sourcebook) (where appropriate);

      5
   3. (c)

      CASS (Client Assets sourcebook); and5

      5
   4. (d)

      ICOBS (Insurance: Conduct of Business sourcebook).5

A common platform firm need not comply with SYSC 6.1.4 R (3) or SYSC 6.1.4 R (4) if it is able to demonstrate that in view of the nature, scale and complexity of its business, and the nature and range of (for a common platform firm)4investment services and activities or (for every other firm) financial services and activities,4 the requirements under those rules are not proportionate and that its compliance function continues to be effective.

[Note:

article 6(3) second paragraph of the MiFID implementing Directive]

A common platform firm must, where appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range of investment services and activities undertaken in the course of that business, establish and maintain an internal audit function which is separate and independent from the other functions and activities of the firm and which has the following responsibilities:

1. (1)

   to establish, implement and maintain an audit plan to examine and evaluate the adequacy and effectiveness of the firm's systems, internal control mechanisms and arrangements;

2. (2)

   to issue recommendations based on the result of work carried out in accordance with (1);

3. (3)

   to verify compliance with those recommendations;

4. (4)

   to report in relation to internal audit matters in accordance with SYSC 4.3.2 R.

[Note:

article 8 of the MiFID implementing Directive]

A firm must ensure the policies and procedures established under SYSC 6.1.1 R include systems and controls that:

1. (1)

   enable it to identify, assess, monitor and manage money laundering risk; and

2. (2)

   are comprehensive and proportionate to the nature, scale and complexity of its activities.

A firm must carry out a1 regular assessment of the adequacy of these systems and controls to ensure that they continue 1to comply with SYSC 6.3.1 R.

A firm must allocate to a director or senior manager (who may also be the money laundering reporting officer) overall responsibility within the firm for the establishment and maintenance of effective anti-money laundering systems and controls.

A firm (with the exception of a sole trader who does not employ any person who is required to be approved under section 59 of the Act (Approval for particular purposes))1 must:

1. (1)

   appoint an individual as MLRO, with responsibility for oversight of its compliance with the FSA'srules on systems and controls against money laundering; and

2. (2)

   ensure that its MLRO has a level of authority and independence within the firm and access to resources and information sufficient to enable him to carry out that responsibility.