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Banking Regulations and Governance Practices in Albania
Veto Right (Article 13)
The veto right is an important aspect of banking regulations in Albania. According to Article 13, the head of the risk management structure/unit has a negative view on certain decisions that should be clearly specified in internal procedures.
- The head of the risk management structure/unit must express clear objections to decisions that pose risks to the bank.
- The Steering Council must communicate directly with the head of this unit on key risk issues to ensure effective decision-making.
Compliance Function (Article 14)
A strong compliance function is essential for banks in Albania. Each bank must have an executive director responsible for identifying, coordinating, and managing compliance risks.
- The compliance structure/unit should be independent from business lines and internal units.
- It should have sufficient resources and authority to perform its duties effectively.
- Responsibilities include:
- Advising senior management on compliance issues
- Educating staff on compliance matters
- Establishing guidelines for compliance
- Monitoring compliance risk
Remuneration Policies (Article 15)
Remuneration policies play a crucial role in ensuring that banks are managed effectively and responsibly. The Steering Council determines remuneration policies based on the bank’s strategy, long-term objectives, performance, and development.
- Remuneration schemes should be risk-profiled to reflect the bank’s risk profile.
- This means that rewards should be tied to both individual and organizational performance, as well as risk management.
Additional Compliance Program Requirements
The document also outlines additional requirements for a compliance program, including:
- A risk-centered compliance program with ongoing review
- Staff training and education on compliance matters
- Performance indicators to measure compliance risk
- Monitoring, testing, and reporting of compliance results