Nick and Asmara on their role as external compliance officers for fund managers: “Compliance is not a matter of ticking boxes.”

Why do fund managers engage an external compliance officer?

Nick: “This role often arises because small parties do not have a full-time compliance officer. However, fund managers holding a licence are required to establish a compliance function. Hiring an external compliance officer can therefore be an attractive option. As an organisation, you outsource the execution of the compliance function to an external compliance officer from PG.”

Asmara adds: “You notice that smaller managers (in terms of staff) seek support in understanding legislation and how it evolves. Additionally, they need assistance in responding to various information requests from regulators such as the AFM and DNB. Fund managers look for an independent external compliance officer who can provide guidance and insight.”

Nick: “By hiring an external compliance officer, firms bring in a great deal of specialist knowledge. The external compliance officer is backed by a broader team of specialists, for instance in the areas of sustainability (SFDR), ESG, privacy, IT compliance (DORA), risk management, and so on. Furthermore, the external compliance officer has extensive industry knowledge gained from working with other organisations. This allows us to give our clients a solid overview of market developments.”

By hiring an external compliance officer, firms bring in a great deal of specialist knowledge

What does an external compliance officer actually do?

Quick scan

As an external compliance officer, you conduct independent oversight within an agreed mandate, assess, and advise on compliance with laws and regulations, taking into account both the legal framework and the organisation’s daily operations. When PG is asked to fulfil the role of external compliance officer, we always start with a quick scan to map compliance risks and gaps in policies and processes.

Nick: “Through this scan, we do not only identify what is missing, but also determine whether we are actually able and willing to fulfil the role.”

Asmara: “As an external compliance officer, you have a responsibility towards the organisation, but also towards the regulator. The quick scan also allows you to assess whether compliance is truly embedded in the organisation or whether it is mainly a paper exercise.”

Performing the role of external compliance officer

As external compliance officers, Asmara and Nick assist fund managers with implementing policies, monitoring compliance with laws and regulations (such as Wwft, SFDR, DORA), conducting periodic monitoring, and reporting to the board. They also serve as points of contact for regulators and other external parties such as depositaries.

At smaller organisations, there is often direct contact with the board. In fund managers with larger teams, communication occurs through various layers and direct contact with the board is periodic. In larger fund management firms, cooperation typically runs through internal compliance officers.

Nick: “Internal compliance officers at larger organisations sometimes engage us. We often see that these officers are overwhelmed with daily operational matters, leaving them little time for reviewing policies, tracking regulatory developments, or drafting compliance reports. We can offer valuable support and take much of this workload off their shoulders.”

Asmara adds: “As an external compliance officer, you maintain independence, which is a vital and comfortable position. You can assess risks objectively from a slight distance, while remaining closely involved enough to think along with practical solutions.”

How did you enter the role of external compliance officer?

Asmara joined Projective Group (formerly Charco & Dique) in 2017 and has since held several external compliance officer roles, mainly for fund managers. “I more or less fell into the role after joining Charco & Dique. The human side of the work especially appeals to me.”

The human side of the work especially appeals to me

Nick has worked in the same role since 2020: “I started as a compliance consultant,” says Nick. “I deliberately chose this role, partly because of the client contact and the practical nature of the work. In practice, you really feel that you are adding value to the organisation.”

Nick and Asmara also point out that the role of external compliance officer was initially new to them. Asmara: “Many of our clients first approach us for support with their licence applications to operate as fund managers under the AFM. During this process, you get to know the organisation’s structure and the people behind it. It’s then a small step to take on the external compliance officer role at that organisation.”

What characteristics of fund managers appeal to you?

Nick and Asmara: “Fund managers in the Netherlands come in all shapes and sizes. They possess considerable knowledge and experience in the financial sector. Fund managers establish funds with very specific goals or investment strategies. These can vary greatly – think of the many different asset types in which funds can invest: private equity, crypto-assets, real estate, equities, bonds, or other financial instruments.”

This diversity also leads to complexity in the regulations with which they must comply. Fund managers in the Netherlands are subject to an enormous amount of regulation. While this can be a heavy burden for fund managers, it provides an interesting playing field for us as external compliance officers and offers a real opportunity to support them effectively.

What trends are you currently seeing among fund managers?

According to Nick and Asmara, the following trends are emerging:

• Increasing pressure from new (European) legislation, including upcoming changes to the AIFM/UCITS directives, the Anti-Money Laundering Regulation (AMLR), and DORA;
• Growing focus on risk management;
• An increasing move towards data-driven supervision by regulators (AFM and DNB);
• Stricter requirements around documentation and reporting;
• Greater involvement from depositaries and auditors, for example through information requests.

Nick: “We see organisations struggling more and more with the information requests (market surveys, questionnaires, information registers, and so on) and reporting obligations they are subject to. This has only become more complex over the years.”

In addition, regulators expect quick and complete access to the necessary information. In practice, however, many fund managers' data management is not yet sufficiently organised to meet these expectations.

Asmara: “Where previously there was hardly any direct contact, auditors and depositaries are now increasingly taking the initiative. For instance, we are now approached annually for discussions on compliance-related matters – something that was rare in the past.”

How do you view developments in AI within this sector?

Nick: “AI and supporting tools can certainly add value, particularly for standardised tasks. However, the human factor remains crucial – for example, when dealing with resistance or effectively communicating policies.”

Asmara: “Although many processes can be automated, compliance ultimately revolves around people and behaviour within the organisation. As external compliance officers, we must not lose sight of this.”

Nick: “That’s why I believe our role will only become more important – acting as a vital link between regulation, the organisation, and the regulator. It’s about creating buy-in within the organisation. Compliance is not a matter of ticking boxes. It requires a constant balancing act between regulatory demands, risks, and everyday operations. The external compliance officer acts not only as an adviser but also as a sparring partner, guardian of integrity, and sometimes even as the moral compass of a fund manager.”

Compliance is not a matter of ticking boxes. It requires a constant balancing act between regulatory demands, risks, and everyday operations.

Would you like to learn more about how an external compliance officer can support your organisation?