Our Financial Services Regulatory Advisory Services Practice

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1 Our Financial Services Regulatory Advisory Services Practice We are a team of dedicated regulatory specialists within the Financial Services Practice of PricewaterhouseCoopers, who have hands-on experience in advising and assisting our clients in meeting compliance obligations and regulatory challenges. Our team has a unique blend of regulatory expertise and comprises former accountants, lawyers, former regulators and industry professionals. The team is also populated by consultants who have a mix of process, controls and technology credentials who focus on bringing change to your organisation. Moreover, we work closely with s global network of professionals, which enables us to assist our clients anywhere in the world. We can help you manage business and regulatory risks, particularly in the areas of: Licensing and authorisation Investment product authorisation Governance, oversights, systems and controls Keeping pace with regulatory changes Fraud and breaches remediation Legal entity structures Regulatory filing and reporting 0

2 Our Services Set out below are the areas which our clients typically seek assistance from us this however is not an exhaustive list of our service offerings and we would be pleased to meet with you in person to discuss how our team may work with you in a particular circumstance. The depth of regulatory knowledge and project experience possessed by our team enable us to provide a multitude of services to our clients and which are tailor-made to suit their individual circumstances. Licensing and Authorisation (HKMA, SFC, HKEx) Advice on Licensing and Authorisation Requirements Advise on the licensing and authorisation requirements under the Hong Kong regulatory regimes for conducting banking and/or securities-related business Comment on the nature / scope of the proposed activities of your institution vis-à-vis the licensing and/or authorisation requirements promulgated by the Hong Kong Monetary Authority ( HKMA ), the Securities and Futures Commission ( SFC ) and/or the Hong Kong Exchanges & Clearing Limited ( HKEx ) Advise management on the possible legal forms to be adopted by the Hong Kong establishment for conducting the business activities in Hong Kong and the relevant regulatory considerations (e.g. prudential ratios and regulatory capital, audit and regulatory reporting etc.) Licensing Applications Provide preliminary advice on the regulatory approval process of the HKMA, SFC and/or HKEx and identify potential regulatory hurdles that may arise during the application process Advise on the fit and proper criteria as well as the competency requirements for your institution and the individual applicants (e.g. those licensed / registered as the Chief Executive, Responsible Officers, Executive Officers, Executive Directors etc.) Assist in the preparation of the application forms and documents including, inter alia, business plan, compliance polices and procedures, etc. for submission to the regulators Respond to the queries raised by the regulators during their review of the application documents 1

3 Investment Product Authorisation Advice on Authorisation Requirements Advise on the investment product authorisation requirements under the SFO, including the available "safe-harbour" exemptions which may exempt a product from being authorised by the SFC Evaluate the possible structure / distribution arrangement etc. of the proposed products which fulfil the authorisation requirements Investment Products Authorisation Provide preliminary advice on the regulatory approval process of the SFC and identify potential regulatory issues / hurdles that may arise during the approval process Assist in the preparation of the application forms and documents (e.g. Offering Document and Key Facts Statement) for submission to the SFC Liaise with the SFC in connection with any comments raised by them during the vetting process Perform vetting of advertising materials vis-à-vis the requirements stipulated under the SFC Advertising Guidelines Ongoing Compliance Assist in the preparation of ad-hoc filing or notifications to the SFC 2

4 Governance, Oversight, Systems and Controls Controls and Compliance Reviews Perform independent review of the end-to-end processes of your institution vis-à-vis the latest regulatory requirements. Review areas may include, inter alia, the following: AML / KYC procedures; Selling practices and disclosures to customers; Trade processing and allocation; Risk identification and monitoring; Bank secrecy and handling of customer data; Reconciliation and back-end processing; etc. Conduct as-is analysis and identify potential gaps and deviations against the relevant regulatory standards and provide recommendations with reference to leading industry practices Assist management in designing and implementing the necessary enhancements to the existing processes and procedures Compliance Framework and Methodology Evaluate the effectiveness and adequacy of the compliance framework, which may include compliance function structure, resources, competencies, independence, compliance policies and procedures, compliance monitoring, etc. Evaluate the scope, quality and structure of the compliance functions Design a robust risk and compliance function for your institution commensurate with your business and risk profile Mock Inspection Perform mock inspections to assist your institution in preparing for HKMA / SFC inspections through mock interviews, documentation review and sample testing 3

5 Governance, Oversight, Systems and Controls (Cont d) Compliance Support Act as Project Management Office (PMO) to lead compliance-related projects Provide resources under secondment arrangement to support the execution and accomplishment of compliance tasks Compliance Obligations Register Prepare a compliance obligations register which capture all business conduct, operational and regulatory reporting obligations relevant to your business Policies and Documentation Prepare/enhance the compliance policies and documentation (e.g. compliance manual, operational procedures manual, prudential reporting manuals, etc.) of your institution Compliance Health-Check Perform periodic health-check of the compliance status of your institution, taking into account the latest regulatory developments and contemporary issues and hot topics in the market Compliance Due diligence Perform compliance due diligence associated with acquisitions of new businesses or when contracting with service providers 4

6 Keeping Pace with Regulatory Changes Compliance Training Develop effective compliance training programs and training materials taking into account your institution s business circumstances and training needs Deliver tailor made training sessions to enhance your staff s awareness and understanding of their compliance responsibilities, for example training specific to a particular area of your institution s business or operations Regulatory Radar Deliver periodic update of the regulatory changes and developments promulgated by the HKMA, SFC, HKEx and other relevant bodies in respect of rules and regulations relevant to the banking and capital markets industry Assess the potential impact of new regulations to your institution s business and operations Fraud and Breaches Remediation Fraud and Breaches Remediation Assess and evaluate the impact and implications of identified incidents, in particular whether there are other uncovered issues Identify the root causes of those incidents, including whether there are any internal control weaknesses or deficiencies within the institution Provide recommendations to enhance your institution s prevention and detection systems which minimise the recurrence of similar incidents in future Advise management on the relevant regulatory notification requirements and the corresponding communication protocol / strategy Legal Entity Structures Advice on Business and Operating Models Advise on the evaluation and determination of a target business and operating model which complies with relevant licensing and regulatory requirements and which is capital efficient in light of your business needs and specific circumstances 5

7 Regulatory Filing and Reporting Liquidity and Capital Management Advise management on the regulatory capital requirements under the rules and regulations promulgated by the HKMA / SFC Advise on the establishment of systems and controls in monitoring the regulatory capital positions of your institution Advise management on possible funding arrangement and available options to comply with the minimum regulatory capital requirements Regulatory Filing Advise on the compilation of the Regulatory Returns (e.g. Banking Returns / Financial Resources Returns) in accordance with the relevant guidelines and address management s queries on the interpretation / application of the compilation requirements Assist in the drafting and preparation of various notifications, forms and questionnaires etc. pursuant to the regulatory requirements or ad-hoc requests from the regulators Review the regulatory reporting production process and assess the controls governing the production environment FRR Modification (for SFC licensed corporations only) Perform assessment on the liquid capital implications of your company s business and identify potential modification options Evaluate each of these options vis-à-vis the potential liquid capital savings, timeframe required for the modification process and conditions which the SFC may impose pertinent to the modification application Support management in liaising with the SFC in respect of comments raised by them during the application process 6