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Compliance Program Management: The Key to Protecting Reputation in Philippines

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In a bid to ensure that its stakeholders are protected from business risks, a leading financial institution in the Philippines has established a robust compliance function and program to mitigate regulatory and reputational risk.

Background

Under Monetary Board Resolution No.116 dated January 20, 2011, and BSP Circular 747 Series of 2012 on the Revised Compliance Framework for Banks, the bank is required to implement a formal and defined compliance program that covers all areas of its banking activities.

Importance of Compliance System

The compliance system is critical in identifying, evaluating, and addressing regulatory and reputational risk. The enterprise-wide compliance program allows the bank to consider how activities across different business lines may affect business or compliance risks, providing a comprehensive view of the organization’s overall risk profile.

Organizational Structure

The Bank’s Compliance Office, led by its Chief Compliance Officer, oversees the implementation of the compliance function and is responsible for identifying control processes that require enhancement. The office is organized into five key areas:

  • Regulatory Compliance
  • Corporate Governance
  • Anti-Money Laundering Compliance
  • FATCA Compliance
  • Data Privacy Office

Testing and Monitoring Process

To ensure the effectiveness of its compliance program, the bank applies a three-layered testing and monitoring process:

  • Unit self-assessment testing
  • Independent random testing
  • Periodic review by the Internal Audit unit

Promoting Adherence to Compliance Requirements

The Compliance Office also promotes adherence to compliance requirements through a database accessible to all employees and ensures timely dissemination of new regulations and developments through dialogue with regulators.

Oversight and Governance

The Board of Directors, through its Audit Committee, provides oversight of the bank’s business risk management and implementation of its compliance function, ensuring that the institution is protected from:

  • Regulatory or legal sanctions
  • Material financial loss
  • Reputational damage

By implementing a robust compliance program, the bank can ensure the protection of its stakeholders and maintain a strong reputation in the Philippines.