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The Board of Directors and Senior Management of Bank Audi sal 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. All business lines are therefore required to have a good understanding of and to comply with the letter, spirit and intent of applicable laws, regulations and standards in each of the jurisdictions in which the Group operates, and of the ongoing implementation of and adherence to group compliance policies. Their contents are mandatory and represent minimum standards that apply throughout the Group. They are, of course, adapted at local level to be in line with local requirements as well, the general principle being that the stringer requirement applies as long as it does not contradict with local laws and regulations.

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 are continuing to do so. While these touch on broadly all areas of compliance and anti-money laundering, hot topics mainly include financing of terrorism, economic and trade sanctions, anti-bribery and corruption, and last but not least, global initiatives to fight tax evasion (OECD Common Reporting Standard and FATCA). All represent challenges facing the Group, as well as banks and financial institutions worldwide. As a result, regulatory authorities worldwide are becoming more stringent, and relationships with global correspondent banks are now more demanding.

In 2015, the Compliance function Group-wide continued to ensure that risks deriving from local and global developments are appropriately monitored and managed with suitable mitigating measures 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, its governance, policies, procedures and measurement methods, so as to keep succeeding in this balancing act, promoting a compliance culture at group level, remaining a trusted and skilled business partner, and helping achieve durable earnings. Current arrangements have proven to be satisfactory, as witnessed by results of internal/external audit reports and regulatory examinations that showed no major breaches or violations. We have succeeded in maintaining very positive relationships with regulators (both local and international) and correspondent banks. We consider those valuable assets and testimonies of the soundness of our compliance practices that translate into: continuous Senior Management involvement in compliance, a clear, risk-based approach to AML/CFT, compliance policies embedded within the business, compliance procedures applied consistently, a robust procedure for reporting suspicious transactions, and a clear lack of complacency. This places the Group today in a leadership position in the Middle East region in terms of efficiency and effectiveness of its compliance program.

As the diverse nature of our group’s business and geographic distribution of our subsidiaries and client base are leading to increasing exposure to compliance risks and require sustained efforts from all the concerned at group and entity levels (business and compliance) to meet the requirements at all times, the Group Compliance function has launched, in 2015, a major initiative towards enterprise-wide compliance management.

Enterprise-wide compliance management requires stakeholders at all group entities to further work together in a coherent manner and upgrade the levels of business and compliance controls aiming at protecting our franchise. To that effect, a roadmap for an Enterprise-Wide Compliance Program was set along the following headlines:
  • Review of the Governance and Operating model of the Compliance function at group level.
  • Integration of Compliance Risk as a major component of target market definition.
  • Improvement of group-level monitoring of the implementation of compliance programs within group entities.
  • Upgrade of group standards on major elements of AML/CFT programs in place within group entities (mainly: Know Your Customer process, risk-based approach and AML/CFT monitoring systems, among others).
  • Increase of the level of coordination with other control functions to achieve compliance.
  • Enhancement of the Compliance Training and Awareness Program managed and executed at group level.