Bosnia and Herzegovina Banking Sector Takes First Steps Towards Greater Transparency and Compliance

In a country plagued by corruption and bureaucratic red tape, the Central Bank of Bosnia and Herzegovina (CBBH) is making a bold move towards greater transparency and compliance. Despite facing significant challenges, the CBBH has established a robust compliance function, adopted a new code of ethics, and implemented an anonymous reporting system for whistleblowers.

Challenges in a Complex Constitutional Setup

Bosnia and Herzegovina’s complex constitutional setup often results in disagreement and stalemate among the country’s three major ethnic groups. The country’s ranking as one of the worst in Europe in Transparency International’s Corruption Perceptions Index only serves to highlight the scale of the challenge facing the CBBH.

The Central Bank’s Efforts Towards Greater Transparency

Under the leadership of Sanja Romić-Bajramović, the CBBH’s compliance officer, the central bank has taken significant steps towards establishing a culture of integrity and transparency. The establishment of a compliance function in 2020 marked an important milestone, and the adoption of a new code of ethics in 2022 provided clear guidance for employees on conflicts of interest, gifts and hospitality.

The Whistleblower Facility: A Notable Innovation

The CBBH’s whistleblower facility, known as the “ethical line,” is perhaps the most notable innovation. This online system allows anonymous reporting of corruption or suspicious activities, with data stored on a server in Ireland to ensure confidentiality. The system has already received eight reports, with internal investigations conducted in all cases.

Challenges Ahead

While there are still challenges ahead, including a lack of suitable facilities for safely reporting wrongdoing and a culture that often discourages whistleblowers, the CBBH’s efforts are a significant step towards greater transparency and compliance. As Enes Kurtović, the central bank’s communications manager, notes, “Having something like this [the whistleblower facility] is a huge thing.”

A Model for Other Public Institutions

The CBBH’s commitment to transparency and compliance is likely to serve as an example for other public institutions in Bosnia and Herzegovina. The country’s efforts to join the European Union will also require all institutions to have similar anonymous reporting lines, making the CBBH’s innovation a pioneering move in this regard.

Conclusion

As Romić-Bajramović notes, “We wanted to be a leader among our public institutions in Bosnia and Herzegovina… it is most important for us as a public institution to build integrity [and serve] as a model for other parts of the public sector.” The CBBH’s efforts are a significant step towards greater transparency and compliance, and are likely to have a positive impact on the country’s banking sector and beyond.