The job of compliance officer in commercial banks

The compliance officer is one of the main reasons of success for commercial banks, as he helps maintain the banks’ reputation and credibility and protect the interests of shareholders and depositors.


Lo’ai Batainah – –

It has taken sometime to convince officials of the importance of compliance, especially for the public shareholding companies of different types and sizes.
Legal and financial researchers paid more attention to compliance due to its legal and financial importance in ensuring the application of local regulations and relevant requirements.
The compliance term has philosophical, moral and social meanings. Philosophically, compliance means the essence of life as man cannot live without the principle of compliance. This term morally means maintaining the social gains, and it socially means commitment to social traditions.
Compliance officer identifies, evaluates and submits recommendations to the executive management and board of directors. In addition, he prepares reports on non-compliance risks of commercial or investment banks for the board of directors and regulatory authorities. These reports include regulatory, financial and administrative sanctions or financial losses, and these sanctions, risks or losses may defame the bank. In addition, they may expose the bank to more operating risks that arise from its failure to comply with regulations or standards of conduct and good practice.
As for commercial banks, the principle of compliance includes two levels; the first is the rules and regulations set by the regulatory and supervisory entities to organise the work of banks; and the second level is the banks’ compliance with the internal regulations.
Compliance with regulations, standards and instructions is one of the main reasons of success for commercial banks, as it helps maintain the banks’ reputation and credibility as well as the interests of shareholders and depositors. In addition, compliance is considered a comprehensive and multi-aspect responsibility of all parties in commercial banks, such as the board of directors, the top management and employees according to their powers and roles.
The responsibility of compliance officer in the commercial banks can be summarised in the following:
n Providing the necessary mechanisms, systems and frameworks to ensure combating crimes such as money laundering
n Maintaining the values and professional practices in the commercial, banking and financial business
n Facing the risk of non-compliance with laws, regulations and legal requirements
n Building bridges of trust and cooperation between commercial banks as well as regulatory and legislative authorities
n Making an annual review of all instructions included in the policies and procedures of banks to ensure their compliance with regulations
n Informing all employees of all commitment policies and instructions through the top management
n Working constantly to create a special environment for compliance, boosting awareness of compliance and building the culture of positive thinking for the bank’s officials and other employees
n Reviewing and approving all existing and new banking products to make sure they meet the statutory requirements
n Designing and developing a system for the preparation of internal reports on the control of compliance and self-assessment of non-compliance risks
n Preparing and submitting compliance reports to the board of directors, top management and risk committee
Compliance officers should identify, document and evaluate non-compliance risks that are related to commercial banks (whether they are statutory, reputation or strategic risks). This includes the development of new products, business practice, and new types of business, customer relations and physical changes to the nature of these relations. If the bank has a committee for the new products, a compliance officer should participate in it.
Compliance officers should enjoy independency in the commercial banks.
In addition, there should be no conflict in the tasks assigned to the compliance offer and those working at the compliance management. These employees should have the right to get the information, documents and files, as well as communicating with related staff in the commercial bank. Moreover, these employees should have full freedom to submit their reports to the top management, the board of directors and any related committee when exploring any weakness.
In the end, the role of compliance officer in any commercial bank is represented in ensuring that the bank complies with regulations and any subsequent amendments to the articles of incorporation, the internal regulations and the law of money laundering and terrorism financing, as well as the instructions and publications of the central bank and Basel standards.
The compliance officer is one of the main reasons of success for commercial banks, as he helps maintain the banks’ reputation and credibility and protect the interests of shareholders and depositors.