Financial Crime World

Bulgarian Banks Face Compliance Risks, Experts Warn

SOFIA - In a move to strengthen risk management practices, Bulgarian banks must implement effective non-compliance risk prevention programmes to ensure regulatory requirements are met. The Office of the Comptroller of the Currency (OCC) in the USA has issued guidelines for such programs, which must be tailored to each individual bank.

Risk of Non-Compliance

According to experts, the risk of non-compliance with regulatory requirements is one of the most significant and relevant risks facing Bulgarian banks. The bankruptcy of Corporate Commercial Bank and poor practices in asset distribution have highlighted the need for robust compliance programmes.

Mitigating Risks

To mitigate these risks, banks must:

  • Develop policies and procedures for monitoring compliance
  • Train staff to ensure client rights are protected
  • Analyze bank policies and procedures for risk control
  • Provide corrective action when necessary

Strengthening Banking Supervision

The Bulgarian National Bank (BNB) has issued regulations to strengthen banking supervision, including the Capital Requirements Directive and Regulation, adopted by the European Parliament and EU Council. The new capital adequacy rules and buffers aim to ensure the stability of the financial system.

Implementing Effective Compliance Programmes

Implementing effective compliance programmes requires a comprehensive approach, including:

  • Policies
  • Procedures
  • Training
  • Monitoring
  • Responding to customer complaints
  • Establishing clear lines of authority and accountability

OCC Guidelines

The OCC guidelines emphasize that each bank’s programme must be specific to its individual circumstances, taking into account factors such as:

  • Size
  • Number of branches
  • Organizational structure
  • Business strategy
  • Product offerings
  • Subsidiaries
  • Geographical reach

Bulgarian Banking System

In Bulgaria, the banking system has shown flexibility and efficiency during the global financial crisis and economic downturn. However, experts warn that complacency is not an option, and banks must remain vigilant in managing compliance risks to ensure stability and trust in the financial system.

Components of Non-Compliance Risk Prevention Programme (SMAART)

SMAART Components

  1. Policies: Written policies and procedures for monitoring compliance
  2. Monitoring: Daily supervision process to ensure real-time performance
  3. Assessment: Periodic analysis of summarized records and operations
  4. Accountability: Allocation of responsibilities, authority, and accountability
  5. Response: Processing customer complaints, overcoming violations, control procedure modification
  6. Training: Communication and staff training on compliance policies and procedures

Prioritizing Compliance

Banks must prioritize implementing these components to minimize the risk of non-compliance with regulatory requirements and ensure a stable financial system for Bulgaria’s economy.