Are you ready for your CIMA inspection?
Our Regulatory and Funds team have assisted many clients with these inspections and would like to share our insights so we can help others navigate potential pitfalls.
Our key message: Be prepared by being compliant.
Some key points/what to expect:
Forensic review: Prepare for an extremely thorough review of all applicable policies, procedures and records and expect multiple follow-on requests for further information and documents. Be prepared to allocate extensive management time.
Outsourced process: CIMA is generally instructing the big international accountancy firms to undertake inspections. This ensures a consistent level of professionalism throughout the inspection but it can lead to different approaches between different firms. This in turn means it can be difficult to predict what issues CIMA may focus on.
Duration: Your inspection may feel like it's never-ending – our latest Registered Person AML/CFT/CPF inspection lasted 10 months - but provided CIMA does not uncover material breaches which could lead to fines, CIMA will generally issue a formal 'closing letter' (following the issue of its final report) which helpfully draws a line under the whole process.
Expect remediation requests: However compliant you think you are, be prepared for remediation requests. This could include for example being asked to update particular policy documents. You will be given deadlines by which you must complete the remedial actions, and reasonable timeframes will be given unless CIMA has serious concerns regarding a material breach. Proactive cooperation with CIMA throughout and swift remediation when requested are of course key.
More severe consequences: CIMA’s regulatory toolkit is extensive and besides issuing fines in more serious cases it would also have the power for example to force an independent audit to be undertaken, to demand the appointment of an independent non-executive director or even demand periodic meetings with such director.
How we can help: Whether you have ad hoc queries or would like a full compliance review (which could include us undertaking a full dress rehearsal of an inspection for you) please get in touch with your usual Harneys contact or one of the authors.
