pc
nid 94215
Jul 24, 2026
tojuri@vixio.com
Netherlands
Dutch Authority for the Financial Markets
horizon scanning
133% of draft length
draft in Generated
Generated
1956 charsNetherlands Authority for the Financial Markets Publishes Compliance and Internal Audit Guidance for Investment Managers
On July 23, 2026, the Dutch Authority for the Financial Markets (AFM) published findings from its examination of compliance and internal audit functions at Dutch investment managers. The AFM conducted this review as part of a European Common Supervisory Action (CSA) coordinated by the European Securities and Markets Authority (ESMA).
The AFM identified three key areas requiring improvement. First, compliance documentation often lacks currency, completeness, or specificity to individual organisations' risk profiles. Planning, monitoring, and reporting activities frequently fail to align effectively, creating risks that deficiencies may not be identified or addressed promptly. Second, many investment managers outsource compliance or internal audit functions to external parties while maintaining insufficient oversight. The AFM observed that organisations sometimes rely heavily on external providers, reducing visibility of risks and potentially compromising control effectiveness. Investment managers must retain adequate internal knowledge and actively manage the execution of outsourced activities. Third, investment managers frequently apply proportionality principles—such as combining functions or restructuring internal audit arrangements—without adequate documentation. The AFM expects managers to clearly articulate how chosen arrangements align with their organisation's nature, scale, and complexity. The AFM also emphasises the importance of maintaining clear separation between operational activities and control functions to support sound and ethical business conduct.
The AFM will incorporate these findings into its ongoing supervision of investment managers and expects managers to use the research outcomes to strengthen their compliance and internal audit functions. The broader ESMA CSA report examining compliance and internal audit function arrangements across European investment managers is available on the ESMA website.
Agent draft
Not run yet.
Published
2596 charsDutch Authority for the Financial Markets Publishes Compliance and Internal Audit Guidance for Investment Managers
On July 23, 2026, the Dutch Authority for the Financial Markets (AFM) published findings from its examination of compliance and internal audit functions at Dutch investment fund managers. The AFM conducted this review as part of a European Common Supervisory Action (CSA) coordinated by the European Securities and Markets Authority (ESMA).
The AFM identified areas for attention within the compliance function and the internal audit function.
The areas for attention and AFM expectations for the compliance function include:
Insufficiently up-to-date and organisation-specific compliance documentation - the AFM expects fund managers to have detailed written compliance documentation.
Insufficiently integrated design and implementation of the compliance cycle - the AFM expects fund managers to have a well-integrated compliance cycle in place to promote effective control and the timely identification of risks.
Insufficient assurance and embedding of the outsourced compliance function - the AFM expects fund managers that outsource the compliance function to ensure that compliance activities and reporting are aligned with the organisation's specific circumstances and needs.
Unclear separation between the first and second line of defence - the AFM expects fund managers to position the compliance function in the second line of defence, with a primary monitoring role.
The areas for attention and AFM expectations for the internal audit function include:
Insufficiently structured audit plans - the AFM expects fund managers to have audit plans in place that clearly set out which priorities are set and why.
Internal audit activities performed by a third party - the AFM expects fund managers to ensure that sufficient internal knowledge and expertise are present within the organisation, even when internal audit activities are performed by a third party.
Insufficient follow-up of reports - the AFM expects fund managers to clearly document the extent to which recommendations from the internal audit function have been followed.
Insufficiently robust governance for effectiveness assessment - the AFM expects fund managers to conduct a thorough assessment of the internal audit function's effectiveness.
The AFM emphasises the importance of maintaining clear separation between operational activities and control functions to support sound and ethical business conduct. The AFM will incorporate these findings into its ongoing supervision of investment managers and expects managers to use the research outcomes to strengthen their compliance and internal audit functions.