EBI Publications

His responsibilities extend to some clients’ related integrity risks (money laundering, terrorist financing, “know your customer”, fraud and corruption and other prohibited practices), as well as personal conduct related risks (such as insider trading, breaches of the Code of Conduct ). His compliance function includes managing conflicts of interest which may arise from the bank’s multiple relations, as well as managing the consequences of non- compliance with certain bank policies. Challenges The most apparent challenge in mitigating the risks related to financial integrity is controlling all the procedures undergone by the banks’ business line. Controlling is not limited to remediating current suspicious operations, but rather adjusting all processes and policies to be in line with the new designed integrity risk appetite. Furthermore, there are concerns that the design of financial integrity regulations might hamper the realization of financial inclusion goals by, for instance, raising costs of compliance. Other examples are of creating eligibility barriers (e.g. via document requirements) for new users. Internal Banking Procedures to Control the Integrity Risk; Banks, like all other financial institutions, need to endorse the risk mitigation procedures listed. However, as the bank’s business is more capitalized on the concept of trust, banks need to take further steps by instilling a culture of integrity and high ethical standards throughout the bank and to ensure the efficient management of integrity risks. Such ethical culture starts from the top management. The board of directors agrees the policy and framework for integrity and ethics in the bank and is responsible for the adoption of the bank’s codes of conduct for both staff and officials. It has the responsibility, with the assistance of the audit committee, for overseeing that the bank’s integrity risks are properly managed. Members of senior management are responsible for the day to day management of such risks and to ensure that the procedures and guidance in support of the Bank’s integrity and ethical standards are adhered to in the areas for which they are responsible. Furthermore, it is worth mentioning the role of the bank’s chief compliance officer, as a key player in mitigating the integrity risk.

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