Wednesday November 7, 2012

Banks’ compliance function vital, says survey

KUALA LUMPUR: Malaysian banks need to reconsider the scope of compliance function, enhance their compliance risk assessment and management processes into the business, according to a survey conducted by PwC Malaysia and Institute of Bankers Malaysia (IBBM).

The survey entitled Compliance Matters revealed three key findings namely compliance is everyone’s responsibility, compliance risk is not restricted to Anti-Money Laundering Act (AMLA) and that banks have yet to fully capitalise on technology to make compliance activity more efficient and effective.

“The findings of the survey reinforce the importance of compliance in banking in ensuring enforcement across a variety of regulatory demands. It also reiterates the need for continuous learning and education in updating knowledge, increasing awareness and enhancing effectiveness of the compliance function,” IBBM CEO Tay Kay Luan said.

He also pointed out that talent shortage was also a challenge for the banks in moving towards better compliance.

Although almost 85% of survey respondents said that compliance should be everyone’s responsibility, the same number said that the compliance function role was not well understood, indicating a large gap between what is ideal, and what is actually practised.

The survey saw the participation from all Malaysia-based banks with a response rate of 65%. PwC Malaysia and IBBM did an online survey among heads of compliance and senior management from local and foreign Malaysia-based banking institutions in July and August 2012, to identify the challenges faced by Malaysia-based banks in achieving and sustaining compliance.

The survey results show that the entire organisation – from the board, to other departments, including legal, human resource, customer service and internal audit – has a formal role to play in compliance management programmes.

PwC Malaysia executive director for regulatory compliance Foong Mei Lin, who presented the findings of the survey, said there was a need to re-scope the compliance functions and to make it clear that compliance was everyone’s responsibility. “The survey revealed that the top compliance risks are regulations that customer centric in nature requiring the support from front-end business units,” she said, adding that a structured change management programme should be establish to facilitate the communication of compliance.

“Senior management is a key change agent driving the compliance culture throughout the organisation. They must establish clear roles so that there are no conflicts of interests or overlaps in responsibilities among the front line,” she said.

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