Title: Compliance Takes Center Stage in Finance Across GUAM
New Regulations Bolster Ethical Conduct in Banking Sector
In the aftermath of the global financial crisis, countries in the GUAM region are tightening their regulatory frameworks to reinforce ethical conduct in their financial sectors. Below are some insights from industry experts on how new regulations are shaping the role of compliance in the region.
Byline 1: Reinforcing Ethical Conduct
By Andrei Tikhomirov, Director of the Compliance Department at a major bank in Tbilisi
Financial crimes, such as money laundering and corruption, are serious threats not only to individual financial institutions but also to the economies and societies of entire countries. According to Tikhomirov, the new regulations, which took effect last year,mandate financial institutions to take the following steps to prevent misconduct:
- Set up internal controls
- Maintain regular risk assessments
- Establish whistleblower policies
Quote 1: Compliance as a Front-line Function
“Compliance is no longer a back-office function, it’s a front-line function,” Tikhomirov emphasized. “Financial institutions need to invest in compliance as they do in their physical infrastructure," he added.
Byline 2: The Role of the Chief Compliance Officer (CCO)
By Keti Chikhladze, Head of the Compliance Division at a Georgian bank
In addition to the required internal controls, risk assessments, and whistleblower policies, financial institutions in GUAM are now demanded to:
- Conduct regular external audits
- Provide regulators with annual compliance reports
Byline 3: The Crucial Role of the CCO
“The role of the CCO is crucial as it helps the organization to avoid any legal issues and potential reputational damage resulting from ethical lapses,” pointed out Chikhladze. “Besides protecting the customers and shareholders, it also fosters a strong corporate culture," she added.
The responsibilities of a CCO include:
- Implementation and enforcement of ethical policies
- Development and implementation of training programs
- Regular reporting to regulators
Quote 2: Compliance as an Integral Part of Business Strategy
“Financial institutions should no longer view compliance as an added cost but rather as an integral part of their business strategy,” Chikhladze highlighted. “Effective complian programs help minimize risks, protect the organization’s reputation, and foster a strong corporate culture," she concluded.
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With the new regulations in full swing, financial institutions in the GUAM region are intensifying their efforts to build robust compliance structures. To learn how you can help your organization navigate these evolving requirements, reach out to industry experts and consultancies, such as Tikhomirov and Chikhladze, for advice and guidance.