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Management Discussion And Analysis

9.0. Compliance

The Board of Directors and Senior Management consider the Group’s integrity, reputation and franchise to be key assets. Compliance and business functions are entrusted with preserving these assets, constantly identifying improvement areas and rising up to the challenges imposed by compliance requirements. A good understanding of and compliance with the letter, spirit and intent of applicable laws, regulations and standards in each of the jurisdictions in which the Group operates and the ongoing implementation of and adherence to compliance policies are therefore required from all business lines. Their contents are mandatory and represent minimum standards that apply throughout the Group.

Moreover, it is within the Group’s policy for all its subsidiaries to be fully informed of the laws and regulations governing their foreign correspondents, and deal with the latter in conformity with these laws, regulations, procedures, sanctions and restrictive measures imposed by their respective governments. The Group considers this to be a matter of sound banking practices and reflects its commitment to remain compliant with all applicable laws and regulations, and stay abreast of industry standards and best practices observed by the global banking community, whether at international or local levels.

Since the 2008 global financial crisis and the turmoil in the Middle East that started in 2011, the banking industry has been subject to increasing compliance requirements and heightened regulatory scrutiny. Standards and regulatory requirements have substantially increased over the last few years and represent challenges facing the Group, as well as banks and financial institutions worldwide. These relate to broadly all areas of compliance, mainly anti-money laundering and combating the financing of terrorism, complying with economic and trade sanctions, capital markets compliance, and last but not least, global initiatives to fight tax evasion such as the OECD Common Reporting Standard and FATCA. As a result, regulatory authorities worldwide are becoming more stringent and relationships with global correspondent banks are now more demanding. This new state of things calls for enterprise‑wide compliance management that requires stakeholders at all Group entities to further work together in a coherent manner.

In 2014, the Compliance function group-wide continued to ensure that risks deriving from local and global developments are appropriately managed and suitable mitigating measures are effectively implemented. The desired objective is to avoid failures or mistakes with adverse impact on the Group on the one hand, and missing out on good business opportunities on the other, while operating in high risk geographies. The Compliance function also worked on improving itself and its governance, policies, procedures and measurement methods so as to keep succeeding in this balancing act, promote a compliance culture at group level, remain a trusted and skilled business partner, and help achieve durable earnings. This places the Group today in a leading position in the Middle East region in terms of the efficiency and effectiveness of its compliance program.