We understand the challenges during each step of a Section 166 review in the UK and similar reviews in other jurisdictions. We can support our clients with an experienced team of highly skilled individuals who understand the scope of the review and the reviewer’s and regulator’s expectations. We can support our clients to maximise the effectiveness of their responses to the reviewer. Unfocussed responses often lead to an excessively negative audit report and higher than necessary regulatory sanction. Our expertise also includes thorough preparations for regulatory visits. Finally if a regulatory visit or Section 166 review leads to a significant remediation programme we have experience of planning and executing remediation programmes across the full governance, risk and compliance arena.
Most firms will be aware of the regulator’s ‘box’ of supervisory tools, especially the one described under Section 166 (“s166”) of the Financial Services and Markets Act (“FSMA 2000”) that gives the Financial Crime Authority (“FCA”) and Prudential Regulation Authority (“PRA”) the power to commission reports by “Skilled Persons” to conduct an independent review, of a regulated firm on any aspect of a firm’s activities. A Skilled Persons Report (“SPR”) is an independent review of a regulated firm, usually focuses on specific issues where the regulator wishes to delve deeper into a firm’s activities. A s166 requirement can be triggered by regular supervision, a thematic review, or for example a tip-off.
Any firm which has been subject to a SPR will know that this should not and must not be be taken lightly. From receiving the FCA’s draft requirements notice, to completion of the remediation actions and demonstrating sustainability, the process should be carefully and expertly managed.
The s166 investigation is carried out on behalf of the regulator but at the expense of the firm, and almost always results in a comprehensive list of findings and requirements.
Lysis fully understands the challenges of a s166 engagement and draws on an experienced team of highly skilled individuals who understand the regulator’s requirements. We recognise that prompt and effective action is fundamental to our clients' businesses and their relationships with the regulators and prosecuting authorities. Our team can deliver accurate, swift, and incisive analysis of issues. Our substantial Operational Support Team provides a flexible and cost-effective solution for framework, policy, and procedure and, customer file and document review and remediation.
Knowing what to expect from a s166 and preparing for the journey ahead can be a deciding factor in making the process less arduous and ensuring the best outcome.
Understanding the challenges presented within each stage of a s166 engagement will enable you to stay in control. The outcome of the review will have a lasting effect. Being proactive from the outset and taking positive steps is an investment in the firm's future.
How Can Lysis Help?
As financial crime compliance experts, we pride ourselves on helping firms to avert regulatory penalties and to make long-term operational changes that will prevent future penalties. We do this by working closely with firms’ senior executives and with the FCA to ensure that the most pragmatic solutions are found to achieve compliance.
We have significant experience in assisting firms with complex and contentious regulatory issues. Our key point of differentiation is the integration of experienced financial regulation specialists with senior compliance advisors specialising in operational governance, risk and compliance to combine sound technical and industry consultancy experience.
The success of the review depends on preparation, preparation and, again, preparation! This is to ensure that the Skilled Person is fully suppported during the review and reduce the overall disruption to the business during the review. This also gives the Skilled Person a sense of maturity of processes and controls across the firm.
Beginning with an initial discovery phase, we work with your firm to understand and identify the gaps before setting out the steps to build the necessary capabililities and embedded processes needed for a sustainable solution. Each phase of the process is structured to meet key milestones and deliver specified outcomes in a cost-effective manner, within the given time frames.
Lysis has significant experience in assisting clients with complex and contentious regulatory issues. We can help our customers by doing a pre-s166 review, by supporting the firm through the review itself or by assisting to design, manage and execute a s166 remediation programme.
We will provide:
• Structured and experienced responses to regulatory intervention and communications
• Expert and experienced support and guidance
• A full and detailed analysis of your firm’s current situation
• A gap analysis and a clear change roadmap
• A holistic and packaged response to each remedial action
• Delivery of all regulatory recommendations
• Removal from the watch list and a return to a regular footing with the regulator
• Improved operational framework and strategy execution.
We can provide a pre-section 166 health check to ensure that gaps are identified so that they can be addressed prior to the Skilled Person’s report
- Once the FCA has confirmed the specific areas of focus for the S166, Lysis will create a bespoke plan to cover all areas of focus. The plan will include timelines for completion and will aim to mirror the actual S166 as closely as possible.
- We will issue a report at the end of the health check advising of any concerns/gaps with advice on how to address these.
We can conduct mock interviews with senior staff to ensure that the team is prepared for the Section 166 interviews.
- We will interview each member of senior staff relevant to the S166 to prepare them for the Skilled Person’s review interviews.
- This will cover the board member responsible for Financial Crime as well as the MLRO and other staff that deal with Financial Crime.
- Feedback will be provided following each interview to highlight any gaps/areas for improvement
Operational sampling - We can sample check operational processes and data to ensure that the correct procedures are being followed
- We will review a sample of operational processes and data to ensure they have been executed consistently and reviewed in accordance with both the firm’s policies and procedures and industry standards.
- We will provide a written report detailing any gaps and feedback for improvement
Controls testing
- We can test the effectiveness of existing controls and benchmark them against peers and against the industry standards to ensure that they meet the regulator’s expectations.
- We will test, or where appropriate sample test the effectiveness of existing controls. Where appropriate we will be using sample files to measure the effectiveness of the existing systems or will be reviewing the output of existing processes.
- We will compile and provide written reports showing how the firm’s controls measure against peers and against industry standards and make recommendations for improvement.
- We will help the firm draw up an action plan for remediation with clear objectives, timelines, and accountability to ensure that the effectiveness of controls is in line with peers and industry standard and it meets the regulator’s expectations
We understand the challenges during each step of a Section 166 review in the UK and similar reviews in other jurisdictions. We can support our clients with an experienced team of highly skilled individuals who understand the scope of the review and the reviewer’s and regulator’s expectations. We can support our clients to maximise the effectiveness of their responses to the reviewer. Unfocussed responses often lead to an excessively negative audit report and higher than necessary regulatory sanction. Our expertise also includes thorough preparations for regulatory visits. Finally if a regulatory visit or Section 166 review leads to a significant remediation programme we have experience of planning and executing remediation programmes across the full governance, risk and compliance arena.
Most firms will be aware of the regulator’s ‘box’ of supervisory tools, especially the one described under Section 166 (“s166”) of the Financial Services and Markets Act (“FSMA 2000”) that gives the Financial Crime Authority (“FCA”) and Prudential Regulation Authority (“PRA”) the power to commission reports by “Skilled Persons” to conduct an independent review, of a regulated firm on any aspect of a firm’s activities. A Skilled Persons Report (“SPR”) is an independent review of a regulated firm, usually focuses on specific issues where the regulator wishes to delve deeper into a firm’s activities. A s166 requirement can be triggered by regular supervision, a thematic review, or for example a tip-off.
Any firm which has been subject to a SPR will know that this should not and must not be be taken lightly. From receiving the FCA’s draft requirements notice, to completion of the remediation actions and demonstrating sustainability, the process should be carefully and expertly managed.
The s166 investigation is carried out on behalf of the regulator but at the expense of the firm, and almost always results in a comprehensive list of findings and requirements.
Lysis fully understands the challenges of a s166 engagement and draws on an experienced team of highly skilled individuals who understand the regulator’s requirements. We recognise that prompt and effective action is fundamental to our clients' businesses and their relationships with the regulators and prosecuting authorities. Our team can deliver accurate, swift, and incisive analysis of issues. Our substantial Operational Support Team provides a flexible and cost-effective solution for framework, policy, and procedure and, customer file and document review and remediation.
Knowing what to expect from a s166 and preparing for the journey ahead can be a deciding factor in making the process less arduous and ensuring the best outcome.
Understanding the challenges presented within each stage of a s166 engagement will enable you to stay in control. The outcome of the review will have a lasting effect. Being proactive from the outset and taking positive steps is an investment in the firm's future.
How Can Lysis Help?
As financial crime compliance experts, we pride ourselves on helping firms to avert regulatory penalties and to make long-term operational changes that will prevent future penalties. We do this by working closely with firms’ senior executives and with the FCA to ensure that the most pragmatic solutions are found to achieve compliance.
We have significant experience in assisting firms with complex and contentious regulatory issues. Our key point of differentiation is the integration of experienced financial regulation specialists with senior compliance advisors specialising in operational governance, risk and compliance to combine sound technical and industry consultancy experience.
The success of the review depends on preparation, preparation and, again, preparation! This is to ensure that the Skilled Person is fully suppported during the review and reduce the overall disruption to the business during the review. This also gives the Skilled Person a sense of maturity of processes and controls across the firm.
Beginning with an initial discovery phase, we work with your firm to understand and identify the gaps before setting out the steps to build the necessary capabililities and embedded processes needed for a sustainable solution. Each phase of the process is structured to meet key milestones and deliver specified outcomes in a cost-effective manner, within the given time frames.
Lysis has significant experience in assisting clients with complex and contentious regulatory issues. We can help our customers by doing a pre-s166 review, by supporting the firm through the review itself or by assisting to design, manage and execute a s166 remediation programme.
We will provide:
• Structured and experienced responses to regulatory intervention and communications
• Expert and experienced support and guidance
• A full and detailed analysis of your firm’s current situation
• A gap analysis and a clear change roadmap
• A holistic and packaged response to each remedial action
• Delivery of all regulatory recommendations
• Removal from the watch list and a return to a regular footing with the regulator
• Improved operational framework and strategy execution.
We can provide a pre-section 166 health check to ensure that gaps are identified so that they can be addressed prior to the Skilled Person’s report
- Once the FCA has confirmed the specific areas of focus for the S166, Lysis will create a bespoke plan to cover all areas of focus. The plan will include timelines for completion and will aim to mirror the actual S166 as closely as possible.
- We will issue a report at the end of the health check advising of any concerns/gaps with advice on how to address these.
We can conduct mock interviews with senior staff to ensure that the team is prepared for the Section 166 interviews.
- We will interview each member of senior staff relevant to the S166 to prepare them for the Skilled Person’s review interviews.
- This will cover the board member responsible for Financial Crime as well as the MLRO and other staff that deal with Financial Crime.
- Feedback will be provided following each interview to highlight any gaps/areas for improvement
Operational sampling - We can sample check operational processes and data to ensure that the correct procedures are being followed
- We will review a sample of operational processes and data to ensure they have been executed consistently and reviewed in accordance with both the firm’s policies and procedures and industry standards.
- We will provide a written report detailing any gaps and feedback for improvement
Controls testing
- We can test the effectiveness of existing controls and benchmark them against peers and against the industry standards to ensure that they meet the regulator’s expectations.
- We will test, or where appropriate sample test the effectiveness of existing controls. Where appropriate we will be using sample files to measure the effectiveness of the existing systems or will be reviewing the output of existing processes.
- We will compile and provide written reports showing how the firm’s controls measure against peers and against industry standards and make recommendations for improvement.
- We will help the firm draw up an action plan for remediation with clear objectives, timelines, and accountability to ensure that the effectiveness of controls is in line with peers and industry standard and it meets the regulator’s expectations
We understand the challenges during each step of a Section 166 review in the UK and similar reviews in other jurisdictions. We can support our clients with an experienced team of highly skilled individuals who understand the scope of the review and the reviewer’s and regulator’s expectations. We can support our clients to maximise the effectiveness of their responses to the reviewer. Unfocussed responses often lead to an excessively negative audit report and higher than necessary regulatory sanction. Our expertise also includes thorough preparations for regulatory visits. Finally if a regulatory visit or Section 166 review leads to a significant remediation programme we have experience of planning and executing remediation programmes across the full governance, risk and compliance arena.
Most firms will be aware of the regulator’s ‘box’ of supervisory tools, especially the one described under Section 166 (“s166”) of the Financial Services and Markets Act (“FSMA 2000”) that gives the Financial Crime Authority (“FCA”) and Prudential Regulation Authority (“PRA”) the power to commission reports by “Skilled Persons” to conduct an independent review, of a regulated firm on any aspect of a firm’s activities. A Skilled Persons Report (“SPR”) is an independent review of a regulated firm, usually focuses on specific issues where the regulator wishes to delve deeper into a firm’s activities. A s166 requirement can be triggered by regular supervision, a thematic review, or for example a tip-off.
Any firm which has been subject to a SPR will know that this should not and must not be be taken lightly. From receiving the FCA’s draft requirements notice, to completion of the remediation actions and demonstrating sustainability, the process should be carefully and expertly managed.
The s166 investigation is carried out on behalf of the regulator but at the expense of the firm, and almost always results in a comprehensive list of findings and requirements.
Lysis fully understands the challenges of a s166 engagement and draws on an experienced team of highly skilled individuals who understand the regulator’s requirements. We recognise that prompt and effective action is fundamental to our clients' businesses and their relationships with the regulators and prosecuting authorities. Our team can deliver accurate, swift, and incisive analysis of issues. Our substantial Operational Support Team provides a flexible and cost-effective solution for framework, policy, and procedure and, customer file and document review and remediation.
Knowing what to expect from a s166 and preparing for the journey ahead can be a deciding factor in making the process less arduous and ensuring the best outcome.
Understanding the challenges presented within each stage of a s166 engagement will enable you to stay in control. The outcome of the review will have a lasting effect. Being proactive from the outset and taking positive steps is an investment in the firm's future.
How Can Lysis Help?
As financial crime compliance experts, we pride ourselves on helping firms to avert regulatory penalties and to make long-term operational changes that will prevent future penalties. We do this by working closely with firms’ senior executives and with the FCA to ensure that the most pragmatic solutions are found to achieve compliance.
We have significant experience in assisting firms with complex and contentious regulatory issues. Our key point of differentiation is the integration of experienced financial regulation specialists with senior compliance advisors specialising in operational governance, risk and compliance to combine sound technical and industry consultancy experience.
The success of the review depends on preparation, preparation and, again, preparation! This is to ensure that the Skilled Person is fully suppported during the review and reduce the overall disruption to the business during the review. This also gives the Skilled Person a sense of maturity of processes and controls across the firm.
Beginning with an initial discovery phase, we work with your firm to understand and identify the gaps before setting out the steps to build the necessary capabililities and embedded processes needed for a sustainable solution. Each phase of the process is structured to meet key milestones and deliver specified outcomes in a cost-effective manner, within the given time frames.
Lysis has significant experience in assisting clients with complex and contentious regulatory issues. We can help our customers by doing a pre-s166 review, by supporting the firm through the review itself or by assisting to design, manage and execute a s166 remediation programme.
We will provide:
• Structured and experienced responses to regulatory intervention and communications
• Expert and experienced support and guidance
• A full and detailed analysis of your firm’s current situation
• A gap analysis and a clear change roadmap
• A holistic and packaged response to each remedial action
• Delivery of all regulatory recommendations
• Removal from the watch list and a return to a regular footing with the regulator
• Improved operational framework and strategy execution.
We can provide a pre-section 166 health check to ensure that gaps are identified so that they can be addressed prior to the Skilled Person’s report
- Once the FCA has confirmed the specific areas of focus for the S166, Lysis will create a bespoke plan to cover all areas of focus. The plan will include timelines for completion and will aim to mirror the actual S166 as closely as possible.
- We will issue a report at the end of the health check advising of any concerns/gaps with advice on how to address these.
We can conduct mock interviews with senior staff to ensure that the team is prepared for the Section 166 interviews.
- We will interview each member of senior staff relevant to the S166 to prepare them for the Skilled Person’s review interviews.
- This will cover the board member responsible for Financial Crime as well as the MLRO and other staff that deal with Financial Crime.
- Feedback will be provided following each interview to highlight any gaps/areas for improvement
Operational sampling - We can sample check operational processes and data to ensure that the correct procedures are being followed
- We will review a sample of operational processes and data to ensure they have been executed consistently and reviewed in accordance with both the firm’s policies and procedures and industry standards.
- We will provide a written report detailing any gaps and feedback for improvement
Controls testing
- We can test the effectiveness of existing controls and benchmark them against peers and against the industry standards to ensure that they meet the regulator’s expectations.
- We will test, or where appropriate sample test the effectiveness of existing controls. Where appropriate we will be using sample files to measure the effectiveness of the existing systems or will be reviewing the output of existing processes.
- We will compile and provide written reports showing how the firm’s controls measure against peers and against industry standards and make recommendations for improvement.
- We will help the firm draw up an action plan for remediation with clear objectives, timelines, and accountability to ensure that the effectiveness of controls is in line with peers and industry standard and it meets the regulator’s expectations
The difference between the two
A health check refers to a high-level review of the design of a framework and can identify major problem areas in a framework. A maturity assessment is more advanced and provides a detailed review of a firm’s framework which includes the testing of the effectiveness of the framework itself.
Health Check
Maturity Assessment
Review of policies relating to relevant regulations
Review of policies relating to relevant regulations
High Level mapping of policy to regulatory obligations
Detailed mapping of policy to regulatory obligations
Review all procedures relating to operational controls and map these back to the policies
Review all procedures relating to operational controls and map these back to the policies
High Level review of the regulatory framework covering relevant systems, processes and ensuring that governance is in place in order to meet current regulatory requirements
High Level review of the regulatory framework covering relevant systems, processes and ensuring that governance is in place in order to meet current regulatory requirements
High level review of all procedures and documents describing controls and processes (excludes control testing)
Review of all procedures, controls and processes including detailed controls testing.
Carrying out a sample review of the operational outputs (files, reports etc.) in line with current policy and procedures
Reviewing any risk methodologies applied in relation to the specific regulations
Reviewing and testing any monitoring programme - this will include system profiling and reviewing parameters, as well as sample checking the outcome.
Reviewing the firm’s reporting (regulatory reporting, SARs, STORs etc) and monitoring controls
Reviewing and testing the internal and external data inputs to the process and on-going review and escalation processes
Brief review of systems which the firm uses to benchmark to best practice
Brief review of systems which the firm uses to benchmark to best practice
Reviewing the training programmes
Reviewing the training programmes
Reviewing the data retention/record keeping arrangement in relation to its obligations
Reviewing the data retention/record keeping arrangement in relation to its obligations
Meeting with personnel in the 1st and 2nd line of defence to understand the processes they undertake and to ascertain the level of understanding of the regulatory requirements within
Presentation of detailed findings in report format
Presentation of detailed findings in report format including an assessment against the maturity of processes amongst similar firms in the market (market benchmarking) and its suitability for the firm's business mix and risks.
Increase effectiveness,
focus on efficiency
To optimise firms’ FC controls, require an increase in effectiveness of processes along with a dedicated focus on high efficiency which will facilitate sustainable processes to demonstrate effective FC controls under scrutiny.
Firms must also view the improvement of their FC controls as a good commercial investment by focusing on the business advantages these could have for the firm.
Developing Effective Financial Crime (FC) Frameworks
The following directional indicators provide a high-level overview of the implementation and ongoing assessment of sustainable FC controls.
Risks / Actions / Benefits
Assessment of FC risk & controls effectiveness (“FCRA”)
Understand the FC risk and the effectiveness of existing controls.
Create and maintain a library of existing FC risks & controls (tested & untested)
Conduct the mandatory annual FCRA, to drive decisions on: Improvements /transformations; Resources; Management of gaps and de-risking activities; Prioritisations and budgets; MLRO report.
Cost / benefit analysis and assessment of FC controls
Provide clearer understanding of the real cost of compliance.
Continuous risk/benefit assessment to drive controls enhancement and optimisation across FC operations (KYC/KYCC, TM, Screening, escalation);
Effectiveness of FC risk and controls reporting (MI – complete,
accurate and timely);
Costs and impact analysis on:
De-risking – cost/benefit, strategy, action;
Optimisation of FC controls - Sustainability
Improve the effectiveness and efficiency of FC controls driving sustainability.
Prioritisation & decision – FC governance - supported by complete, accurate & timely MI;
Budgets – Senior executive and board approval
Supporting resources planning for 6 months/12 months/3 years to
support:
Lean FC governance and robust 3LoD structure and capabilities;
Clear and realistic objectives taking into consideration the 10
universal outcomes of Principled Performance;
Adequate resources with the necessary skills and expertise to drive
high performance.
Automation focus on optimisation across:
Assurance and Testing
Assess, measure, and provide ongoing assurance.
Development of assurance plan and control testing – assess and measure;
Reporting into a functional FC Governance structure to support decisions:
Executive decisions;
Committees & forums.
Escalation and decision on tactical/planned improvements.
