Compliance Risk Management
- Compliance risk management philosophy, strategy and policies
- Compliance risk management governance structure
- Compliance risk management roles and responsibilities
- Responsibilities of the Chief Compliance Officer (CCO)
1 Compliance risk management philosophy, strategy and policies
Ongoing reform in the banking industry, changes to regulations and the introduction of new legislations, have placed greater emphasis on the need for formal and structured monitoring of compliance with legal and regulatory requirements. FirstBank remains committed to comply fully with both the spirit and the letter of applicable laws and regulations and to always act with care and due diligence. The risk of non-compliance with legal and regulatory requirements ranges from potential financial loss occasion from regulatory sanctions, to loss of business and/or franchise, as well as damage to the Group's reputation.
In ensuring compliance with laws and regulations, the Bank has put in place a robust compliance framework. The Compliance function, under the leadership of the Chief Compliance Officer ensures that the compliance process runs effectively, monitors to ensure that statutory and regulatory requirements are adhered to and ensures that breaches are promptly reported. The Bank has in place a comprehensive Compliance Process Manual, which is accessible to all staff through the Group's e-porter. The Manual defines the roles and responsibilities of all stakeholders in ensuring compliance with laws and regulations. The Group's compliance objectives as well as the minimum acceptable compliance standards across the Group are also specified in the Manual.
While the primary responsibility for complying with regulatory requirements lies with all members of staff conducting particular transactions or activities to which regulation applies, the Board of Directors is ultimately accountable for compliance performance.
The current regulatory regime places so much pressure on financial institutions to know their customers and implement processes for combating money laundering as well as putting in place measures aimed at understanding regulation as it affects the financial services industry and the implication for non-compliance. In this regard, FirstBank has reviewed its Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) Manual, incorporating new guidelines for Know Your Customer (KYC)/Know Your Customers' Business (KYB), in line with the recent CBN AML/CFT Compliance Manual. The Group has continually reviewed and analysed relevant laws and regulations, which are compiled into rule books in order to ensure business is run in line with compliance requirements.
The Compliance function operates from Head Office and some selected hubs, each of which is manned by dedicated Compliance Officers whose main job in the Bank is 'compliance'. Highlights of the scope of coverage of the Compliance function include:
- regulatory compliance;
- anti-money laundering (AML)/countering the financing of terrorism (CFT) compliance (including KYC/KYB principles); and
- corporate governance compliance monitoring.
Each and every one of the activities of the Compliance function is governed by articulated policies and process duly approved by the Board. The Group's AML/CFT regime is driven by a documented, functional AML/CFT Policies and Procedures Manual to which every member of staff has unfettered access through the Group's e-porter. As a living document, the manual is reviewed and updated regularly to reflect the dynamism and changing regulatory or environmental imperatives.
2 Compliance risk management governance structure
In line with international best practice, the Compliance function is responsible for ensuring that the Bank continuously manages its regulatory risk.
Regulatory risk is the risk that occurs when financial institutions do not comply with the spirit and the letter of applicable laws and regulations or supervisory requirements. The management of regulatory risk comprises ensuring compliance with all the statutory and regulatory requirements. The Compliance function is therefore responsible for ensuring compliance with all rules imposed on the business by regulators/supervisors.
Responsibility for managing compliance with internal rules created by FirstBank itself lies with the Internal Audit and Control functions. These are monitored as part of their normal duty of ensuring that an effective system of internal controls is maintained in FirstBank.
Certain internal rules are of such importance that the Executive Committee (EXCO) may require the involvement of the Compliance function for effective implementation. The Compliance function is also, to that extent, responsible for monitoring compliance with internal rules, as determined by EXCO from time to time.
The Compliance function operates independently from Internal Audit and Control functions. However, the Division leverages on the Internal Audit and Control infrastructure by administering compliance checklists on business units and branches through the independent control and normal audit procedures. These compliance reports are forwarded to the Compliance Department for review and subsequent monitoring.
9.3 Compliance risk management roles and responsibilities
Roles and responsibilities for compliance are assigned to various functions as follows:
