Banks in Philippines Must Comply with Stringent Requirements to Avoid Reputation Risk
The Philippine banking industry is set to face stricter compliance requirements as regulators aim to ensure that financial institutions adhere to strict guidelines to protect their reputation and mitigate business risks.
Effective Implementation of Compliance Functions
According to a recent Monetary Board Resolution, banks must establish a robust system and formal program for the effective implementation of compliance functions. This ensures that banks identify, evaluate, and address regulatory and reputational risk across all areas of activity.
Bank’s Compliance Office
The Bank’s Compliance Office, led by Chief Compliance Officer [Name], oversees the implementation of enterprise-wide compliance programs. These programs take into account:
- The size and complexity of the bank
- Relevant rules and regulations
- Business risks that may arise from non-compliance
Mitigating Identified Risks
To mitigate identified risks, measures are formulated using regulatory and self-assessment compliance matrices, which are tested to ensure effectiveness.
Compliance Office Areas
The Compliance Office is organized into several areas, including:
- Regulatory Compliance
- Corporate Governance
- Anti-Money Laundering Compliance
- FATCA Compliance
- Data Privacy Office
Evolving Compliance Practice Areas
In response to rapid regulatory developments and growing complexity in bank products and transactions, the Compliance Office evolves its coverage of compliance practice areas to anticipate and meet forward challenges. This includes:
- Enhancement of scope and domain for new and emerging sources of compliance risk
- Continued dialogue with regulators to ensure prompt dissemination of new regulations
Testing and Monitoring Process
To ensure adherence, the Compliance Office applies a three- layered testing and monitoring process, which includes:
- Unit self-assessment testing
- Independent random testing
- Periodic review by the Bank’s Internal Audit unit
Compliance Database
A compliance database is also accessible to all employees, ensuring that everyone is aware of their role in maintaining compliance.
Oversight and Governance
The Board of Directors, through the Audit Committee, provides oversight of the management of business risk and implementation of compliance functions. This underscores the importance of compliance in protecting the bank’s reputation and ensuring its continued trust among stakeholders.