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Bank of Thailand’s Policy Statement on Financial Institutions’ Compliance

The Bank of Thailand’s (BOT) policy statement regarding the supervision of financial institutions’ compliance is a comprehensive document outlining the expected standards and practices for banks to ensure effective compliance with laws, regulations, and internal policies. This policy aims to maintain a strong culture of compliance, adhere to regulatory requirements, and prevent non-compliance issues from arising.

Key Points from the Policy Statement

  • Establishment of a Compliance Function: Financial institutions are required to establish a compliance function that is responsible for ensuring adherence to laws, regulations, and internal policies.
    • The compliance function should be independent and have direct access to senior management.
    • It should also have adequate resources and budget to perform its duties effectively.
  • Reporting Requirements:
    • Institutions must submit an annual compliance report to the Bank of Thailand within 90 days after the year-end date or within 30 days from the Board’s first meeting in the new year.
    • The report should include details on compliance activities, non-compliance cases, and corrective actions taken.
  • Case Reporting: Financial institutions must promptly report non-compliance cases to the Bank of Thailand, and provide a report on corrective actions taken within 15 days of completion.
  • Risk Management:
    • Institutions are expected to closely coordinate with their risk management units to enhance compliance efficiency.
    • Risk management should be integrated into the overall compliance framework.
  • Cross-Border Issues: Financial institutions conducting business internationally must comply with local laws and regulations in all jurisdictions where they operate.
  • Outsourcing:
    • Outsourced tasks related to the compliance function should be subject to proper supervision by the financial institution’s senior management.
    • The outsourcing service providers must not have any conflict of interest with the financial institution.

By adhering to this policy statement, financial institutions can ensure that they maintain a strong culture of compliance and prevent non-compliance issues from arising. This will ultimately contribute to the stability and trustworthiness of the financial system as a whole.