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Service provider due diligence: An overview
Journal of Financial Compliance,
1
(4),
337-344
(2018)
Abstract
This paper is meant to provide any compliance professional, regardless of their firm’s size or business model, with the information needed to create and implement a reasonable due diligence process within their firm’s compliance programme. You will learn the specific regulations that apply to your type of firm, why they are required and how they can be addressed. It all starts with a risk assessment process, which is explained in sufficient detail that any type of firm can implement one. Specific tools are discussed to help identify and document important risks that must be a part of any sound due diligence process. We look at the initial and ongoing due diligence process and responsibilities firms have and offer examples of meeting these requirements. Finally, we identify how the due diligence process should be memorialised, documented and tested within the compliance programme.
Keywords: risk assessment; due diligence; compliance programme; due diligence questionnaire (DDQ); request for proposal (RFP)
The full article is available to subscribers to the journal.
Author's Biography
Bart J. Mcdonald is the Executive Vice President and Chief Operating Officer of Renaissance Regulatory Services, Inc. (RRS). Mr McDonald is responsible for RRS’ investment advisory practice and has over 20 years of public/private sector regulatory compliance experience. His experience includes a unique combination of advising and auditing investment advisers, private funds, broker-dealers, investment companies and business development companies relative to federal, state, and self-regulatory rules and regulations. As a consultant, Mr McDonald has conducted hundreds of compliance engagements to assess adherence to securities industry rules and regulations. Mr McDonald has extensive experience with all aspects of securities regulation, including portfolio management, performance advertising, soft dollars, trading, sales practices, branch office supervision, financial audits, internal controls and registrations. As a regulator, Mr McDonald was a Branch Chief and Compliance Examiner with the Securities and Exchange Commission’s (SEC) Southeast Regional Office. He was responsible for planning, conducting and supervising complex financial, operational and sales practice examinations of investment advisers, private funds, broker-dealers and investment companies. Mr McDonald provided investigative support to the SEC’s Enforcement staff on matters relating to fraudulent distributions and manipulation of securities, misappropriation of customer funds, material misrepresentations, unregistered broker-dealer and investment advisory activities, and undisclosed compensation. Mr McDonald received a Master of Business Administration and a Bachelor of Arts in economics from Florida Atlantic University. He also holds the Certified Regulatory Compliance Professional designation from the Financial Industry Regulatory Authority (FINRA) Institute at Wharton, the National Society of Compliance Professionals (NSCP) Certified Securities Compliance Professional designation and the Association of Certified Anti- Money Laundering Specialists’ (ACAMS) Certified Anti-Money Laundering Specialist designation.
