Summary of CySEC's Circular C441

Memo #15-2021
CySEC Circular No: C441

Date: 08/04/2021
Subject: Common deficiencies and good practices identified through deskbased reviews regarding certain aspects of the compliance function requirements of the Investment Services and Activities and Regulated Markets Law (‘the Law’)
Purpose: To inform the Regulated Entities about the common deficiencies and good practices identified of a review carried out regarding certain aspects of the compliance function requirements.

In Summary:

CySEC has issued the Circular C441 on 07/04/2021 to inform the Cyprus Investment Firms, the  AIFMs when providing services pursuant to section 6(6) of Law 56(I)/20013, as in force and the UCITS Management companies when providing services pursuant to section 109(4) of Law 78(I)/2012, as in force, for the key findings of a review carried out about the compliance of the Regulated Entities with the compliance function requirements (“the Review”) pursuant to Article 17(2) of the Investment Services and Activities and Regulated Markets Law (‘the Law’).

The Review identified certain good practices that have been implemented, as well as, common deficiencies and/or omissions.

The aim of the Circular C441 is to set out the CySEC’ s key findings of the Review in order to increase the effectiveness of the above mentioned Regulated Entities compliance function.
 
It is noted that the Review covered only a sample of the Regulated Entities.

CySEC invites all Regulated Entities to consider whether they comply with their obligations as per Article 17(2) of the Law, and, where appropriate, to take corrective measures.
 
This Circular refers about the: 

A. The applicable regulatory framework with regard to the Review.

B. The Areas of concern/ Weaknesses identified.

     I. Risk Assessment, Monitoring Activities and Compliance Programme (Article 22 of the Delegated Regulation (EU) 2017/565)

     II. Reporting Obligation (Article 22 (2)(c) and (3) (b) of the Delegated Regulation (EU) 2017/565)

     III. Advisory obligations of the compliance function (Articles 22(2)(b) and 27(3) of Delegated Regulation (EU) 2017/565)

C. Good Practices identified.

CySEC informs the Regulated Entities that they should consider the issues raised in this Circular C441 against their policies and arrangements in place in relation to the compliance with the compliance function requirements. If following a review of their policies they identify weaknesses then they must take immediate actions to ensure compliance.

CySEC further informs that in the context of its ongoing supervision monitoring and given the key findings identified in its Review, CySEC will continue assessing the Regulated Entities’ policies and arrangements relating to the compliance function requirements and will consider, if deemed necessary, taking further actions (e.g. enforcement actions).

Read the CySEC Circular C441

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