Top compliance tips for the Namibian financial services sector in 2022
By Sybil Somaes, Managing Director of Compli-Serve Namibia
With the announcement of the envisioned effective date of the Financial Institutions and Markets Act (“FIMA”) of 01 October 2022, the regulatory landscape for the non-banking sector is set to change. With this article I hope to highlight the key compliance tips for the industry this year.
Get FIMA fit.
I’ve spent some time articulating the impact of the FIMA on players in the non-banking industry in previous articles. What is, however, certain is that the compliance landscape as we know it is about to change for the better – we hope. FIMA is aimed at reforming and modernising the sector and introducing a risk-based supervision regime, bringing Namibia in line with international best practice. Implementing an effective compliance management programme thus becomes essential to ensure an organisation is able to comply on the effective date. It is important for industry to participate in the formal consultation process on the subordinate legislation (regulations and standards) which is currently underway.
The standards and regulations provide the nuts and bolts to the legislation and contain the detailed compliance obligations on firms. The due date for comments and feedback to the regulator is 28 February 2022. We advise firms to ensure that they have a solid understanding of the new compliance obligations and the impact of these on their day-to-day operations. A FIMA readiness assessment or gap analysis would be beneficial and is offered by Compli-Serve Namibia with support available for any queries you might have on subordinate legislation with the regulator.
Navigate compliance obligations in the new normal.
Most firms have adopted a work-from-home (WFH) regime, which has meant that most staff have not returned to the office. While this arrangement has its benefits and allows people to have more control over their lives and time, it does make ensuring compliance to laws for organisations more challenging. It is important that staff remain aware of the compliance obligations in their jobs, especially around matters related to onboarding clients and transactions, whether it be claims paid on insurance policies or divestment from unit trusts. Managers should interact with their staff regularly and where possible on a face-to-face basis so that staff remain aware of the compliance obligations faced by the business, and to ensure that communication lines are kept open, should gaps arise.
Ensure operational resilience.
With the advent of FIMA, financial services firms that operate group structures need to find synergies across multiple regulatory requirements to achieve consistency and efficiency regarding compliance. Groups can take the approach of centrally managing the implementation of the new legislation including representation from the different departments in the project team. Where the new requirements place obligations across all departments, this approach allows these to easily be implemented and amendments can be made for those of application to specific departments only. The FIMA provides a general chapter that prescribes requirements applicable to all industries and some pertaining to specific industries only.
Manage the increased risk of financial crime.
The pandemic has accelerated the use of digital platforms for transactions. This of course has also meant that the risk of financial crime within organisations has increased. Businesses are now required to implement accurate controls and systems to mitigate these crimes. It is essential for anti-money laundering (AML) systems to be resilient and agile to effectively manage these risks. It is advisable for firms to review their policies and procedures documents to check that these are still relevant to the new circumstances.
Cybercrimes and cybersecurity functionality have increased, particularly with the work-from-home revolution. It’s imperative to protect your devices and software so that your digital dealings with staff, clients and the regulator, to name a few are safe against potential cyberattacks. Namibia is likely to see the introduction of cybersecurity and cybercrimes legislation during the course of this year.
In 2021, South Africa enacted their Cybercrimes Act, which covers 20 new cybercrime offences with corresponding penalties. The Act essentially allows for police to intervene with authority and work with foreign states to investigate cybercrimes. Further afield in the UK, there is a call for greater online security and efforts including the new £2.6bn National Cyber Strategy are aimed at enhancing cyber safety, and there are laws assisting citizens such as the Network and Information Systems Regulations that came out in 2018 to improve the cybersecurity of the businesses running essential services. All around the world, cyber safety is an imperative as technology has brought us all a little closer, but also left us more exposed to crime if we aren’t careful.
Change on the horizon.
The Namibian financial services industry is due to undergo substantial change on the regulatory compliance front, and it’s those firms who adequately prepare who will come out unscathed on the other side and able to carry on with their business operations without too much interruption. As Nikhil Rathi, the Chief Executive of the UK’s Financial Conduct Authority stated: “While change cannot always be predicted, what is predictable is that change will come.” And quickly.” All the best for the year ahead.