Compliance Issues of Financial Services Institutions

 

 

  can assist Financial Services Institutions through designated Compliance Officer in establishing Compliance Management and Reporting Framework, by engaging into dialogue the relevant departments/divisions with the objective to formulate and document a comprehensive, efficient, quality and user friendly Compliance Management and Reporting Framework to address all Regulatory and Social /Ethical Compliance needs.

 

Step by step basic plan of action, developed by for formulation, documentation and implementation of a comprehensive, efficient, quality and user friendly Compliance Management and Reporting Framework is listed below:

 

Step 1            Complete a strategic review of the Compliance needs;

 

Step 2          Prepare business case and seek management consent;

 

Step 3          Design the governance arrangements;

 

Step 4         Complete a detailed Compliance review to identify Compliance impact, risks and opportunities;

 

Step 5          Prepare and begin engagement plan to initiate dialogues;

 

Step 6          Draft a Compliance Policy and objectives;

 

Step 7          Design and develop Compliance reporting system;

 

Step 8         Implement and operate the Compliance Management and Reporting System;

 

Step 9         Assess and audit Compliance Management and Reporting System;

 

Step 10       Complete Management/Board level reviews of Compliance Management and Reporting System;

 

Step 11         Prepare Compliance Reporting framework; and

 

Step 12         Install feedback system to continuously review and improve the Compliance Management and Reporting System.

   

The core objective of all the facets of Regulatory and non Regulatory Compliance, initiatives is to ensure maintenance of confidence of all the stakeholders in the financial system by protecting the interests of the depositors, investors, consumers, counter party partners and multilateral agencies.

 

The two broad categories of Compliance in respect of Financial Services Institutions are as follows: 

 

1.         Regulatory Compliance

  

·         Prudential Regulations; 

 

·         Relevant Provisions of existing Laws and Regulations; 

 

·         Guidelines with respect to Know Your Customer; 

 

·         Anti Money Laundering laws and regulations; 

 

·        Timely submissions of accurate data/returns to Regulators and other agencies; and 

 

·         Monitor and report suspicious transactions to President/CEO and other related agencies.

 

2.           Social and Ethical Compliance

  

         Social /Ethical Compliance for Financial Sector falls under following two categories: 

 

a)            Common with other Business Sectors 

 

§        All Corporate Governance issues i.e. non-executive directors, board procedures, audit committees, accurate accounting frameworks and anti-corruption measurers; 

 

§        Accuracy of advertising, (fair choice of statistics to demonstrate performance); 

 

§         Support corporate volunteering and measures of charitable giving.

 

§         Non-discriminatory and sound personnel rules, such as gender bias, anti-racism, anti-sexism and anti-orientation rules, good health and safety provisions and trade union rights; and

 

§        Honest and transparent Social / Ethical Compliance reporting at required intervals.  

 

b)            Specific to Financial Services Sector 

 

§         Lending criteria, including the extent to which social and environmental benefits should be factored into the business decisions making process within banks for project or business lending as well as the impact of Green Economics on the proposed discount rate for project financing;

 

§        Decision-making over bankruptcy and loan call-ins, including the relevance of employment implications for customer firms;

 

§       Investment guideline issues such as lifecycle investing (as in the

    Ethics Code of CFA examination);

 

§         Acceptable levels of profitability from individual financial product lines;

 

§         Insider dealing questions and extent of information privileges;

 

§        Conflict of interest issues where two departments or division of an institution in one transaction actually have divergent interest and claiming the existence of Chinese wall between the two; and 

§        Investment choice issues such as ethical investment, Islamic banking and development investment issues, in which multilaterals such as World Bank have pioneering role. Various associations have prepared guidelines on ‘Investing in Social Responsibility-Risk and Opportunities.

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