Regulatory Compliance for Financial Institutions in Bosnia and Herzegovina Takes Center Stage

In the post-crisis era, regulatory compliance has become a critical aspect of the banking sector in Bosnia and Herzegovina. Following the financial stress of 2007-2009, numerous new rules were introduced to ensure financial stability. As countries in transition like BiH work towards economic stability, market security, and law enforcement, the banking sector plays a vital role in this process.

The Evolution of Regulatory Compliance

In this article, we will explore the regulatory framework for compliance in the banking sector of Bosnia and Herzegovina, highlighting its evolution and key aspects.

Establishing Regulatory Compliance

The Federal Banking Act and the Banking Act of Republic of Srpska have formalized the Compliance function as a control function in banks. This is in line with the Risk Management function and the Internal Audit function. The legal prerogatives of this function are:

• Ensuring compliance with the banking act, bylaws, regulations, standards for cautious banking, anti-money laundering, and counterterrorist financing procedures.
• Identifying risks associated with non-compliance, such as supervision measures, sanctions from regulators, financial losses, and reputational risk.
• Advising management boards and responsible individuals on relevant regulations, standards, and rules.
• Assessing the impact of changes in regulations on bank business.

The Compliance Function in Bosnia and Herzegovina

In Bosnia and Herzegovina, the Compliance function is a control function in banks, alongside Risk Management and Internal Audit. The legal definition of this function emphasizes its role in ensuring regulatory compliance. However, bylaws suggest that employees should be familiar with “good business practices and business ethics,” indicating that compliance prerogatives extend beyond regulatory compliance to include business ethics and good business practices.

Conclusion

In conclusion, regulatory compliance is a critical aspect of the banking sector in Bosnia and Herzegovina. The establishment of the Compliance function as a control function in banks has formalized its role in ensuring regulatory compliance. While regulatory compliance is a key aspect of this function, bylaws suggest that employees should also be familiar with “good business practices and business ethics.” This indicates that compliance prerogatives extend beyond regulatory compliance to include business ethics and good business practices.

Key Takeaways

• Regulatory compliance is a critical aspect of the banking sector in Bosnia and Herzegovina.
• The Compliance function has been formalized as a control function in banks alongside Risk Management and Internal Audit.
• Compliance prerogatives extend beyond regulatory compliance to include business ethics and good business practices.