Compliance and Internal Audit

1.1

Unless otherwise stated, this Part applies to a CRR firm

1. (1) with respect to the carrying on of the following from an establishment in the UK:
1. (a) regulated activities;
2. (b) activities that constitute dealing in investments as principal, disregarding the exclusion in article 15 of Regulated Activities Order;
3. (c) ancillary activities;
4. (d) in relation to MiFID business, ancillary services; and
5. (e) unregulated activities in a prudential context;
2. (2) with respect to the carrying on of passported activities by it from a branch in another EEA state;
3. (3) in a prudential context with respect to activities wherever they are carried on; and
4. (4) taking into account any activity of other members of a group of which the firm is a member.

1.1A

2.1 to 2.6 do not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument.

1.2

In this Part, the following definitions shall apply:

Article 22 Compliance Requirements

means the requirements and obligations set out in Article 22 (Compliance) of the MODR.

Article 24 Audit Requirements

means the requirements and obligations as set out in Article 24 (Internal Audit) of the MODR.

host Member State

has the meaning given in Article 4(1)(56) of MiFID II.

other matters

means, in relation to a requirement under the MODR, matters within the scope of 1.1 that are not within the scope of that requirement.

2.1

A 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) with its obligations under the regulatory system and for countering the risk that the firm might be used to further financial crime.

[Note: Art. 16(2) of MiFID II]

2.2

2.2A

A MiFID investment firm must extend the arrangements required by the Article 22 Compliance Requirements so that they apply with respect to other matters on the following basis:

1. (1) references to “Directive 2014/56/EU” are references to “the regulatory system”;
2. (2) references to “investment services and activities” and “investment services, activities” are references to financial services and activities;
3. (3) references to “relevant persons” are references to relevant persons; and
4. (4) references to “Article 25(2) of this Regulation” are references to General Organisational Requirements 4.1A.

2.2B

A firm that is not a MiFID investment firm must comply with Article 22 Compliance Requirements on the basis set out in 2.2A and as if references to “investment firm” refer to a firm.

2.3

[Deleted.]

2.4

[Deleted.]

2.5

[Deleted.]

2.6

1. (1) This rule applies to a firm conducting investment services and activities from a branch in another EEA State.
2. (2) References to the regulatory system in 2.1 and 2.2A apply in respect of a firm’s branch as if regulatory system includes a host Member State's requirements under MiFID II which are applicable to the investment services and activities conducted from the firm’s branch.

[Note: Art. 16(2) of MiFID II]

3.1

3.1A

A MiFID investment firm must extend the arrangements required by the Article 24 Audit Requirements so they apply with respect to other matters on the following basis:

1. (1) references to “investment services and activities” are financial services and activities;
2. (2) references to “relevant persons” are references to relevant persons; and
3. (3) references to “Article 25(2)” are references to General Organisational Requirements 4.1A.

3.2

A firm that is not a MiFID investment firm must comply with the Article 24 Audit Requirements on the basis set out in 3.1A and as if references to “investment firm” refer to a firm.