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THE COST OF COMPLIANCE or NON-COMPLIANCE - TOAP · THE COST OF COMPLIANCE or NON-COMPLIANCE Atty....
Transcript of THE COST OF COMPLIANCE or NON-COMPLIANCE - TOAP · THE COST OF COMPLIANCE or NON-COMPLIANCE Atty....
THE COST OF COMPLIANCE or
NON-COMPLIANCE
Atty. Mary Joyce M. Sasan
Director, ABCOMP
Chief Compliance & Corp. Gov. Officer, UBP
2016 TOAP Summit
28 June 2016 1
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1a : the act or process of complying to a desire,
demand, proposal, or regimen or to coercion
b : conformity in fulfilling official requirements
2: a disposition to yield to others
3: the ability of an object to yield elastically when a
force is applied : FLEXIBILITY
SOURCE: WWW.MERRIAM-WEBSTER.COM/DICTIONARY/COMPLIANCE
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2 October 1997 – BSP Circular No. 145 was
issued. It required a compliance system and a
compliance officer.
11 January 2008 – BSP Circular No. 598 was
issued. It made mandatory an appointment of a
CCO depending on the total resources of a bank.
I. Milestones
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6 February 2012 – BSP Circular No. 747 was
issued. It amended the entirety of Sec. X180 of
the Manual of Regulations for Banks.
28 May 2013 – BSP Memo. No. 2013-023 was
issued. It provided the BSP Compliance Rating
System.
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CAPITAL – minimum capital requirements;
stress test limits for real estate exposures;
domestic systemically important banks; leverage
ratio, and; liquidity coverage ratio (see BSP
Circular Nos. 781, 839, 856, 881, 904 & 905).
II. Compliance Impact
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GOVERNANCE – defines qualifications, fitness &
suitability of board candidates, senior
management and certain officers; mandate to
Board of Directors to oversee all aspects of
operations and compliance; strengthening of
control function units (ARC), and; corporate
governance trainings (see BSP Circular No. 749,
SEC Memo. Circ. No. 2-2015).
II. Compliance Impact
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TECHNOLOGY – IT risk management; EMV
compliance for cards; 3DES for ATMs;
outsourcing; infrastructure integrity, and;
security of information (see BSP Circular Nos.
808 & 859, Memo. No. 2014-047).
II. Compliance Impact
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OPERATIONS – lending activities (SBL, DOSRI);
cross-selling functions; mandatory agri-agra and
mSME credit allocations; related party
transactions; Credit Information System, and;
Financial Consumer Protection (see BSP
Circular Nos. 855, 857, 895, & 914; RA Nos. 9501,
9510 & 10000).
II. Compliance Impact
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TRANSACTIONS – anti-money laundering &
terrorist financing; cross-border transactions via
remittances or internet banking, and; FATCA (see
BSP Circular No. 706, RA Nos. 9160, 9194, 10167,
10168 & 10365).
II. Compliance Impact
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• Set the tone at the top. Good governance =
good compliance.
• Have an effective ARC in place.
• Get the right people with the right
qualifications, skills & experience.
III. How do we comply?
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• Establish effective compliance partnerships
with your institution, regulators and other
stakeholders.
• Be refreshed: regulations + laws + trends +
technology + training.
III. How do we comply?
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• CAMELS/ROCA Rating
• Specialized Ratings (IT Risk, Trust, AML)
• Local or Foreign Recognition or Awards
• Strong and stable perception and confidence
from Stakeholders/Public
IV. Fruits of Compliance
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1. Corrective Actions
- BSP Directives
- Letter of Commitment (LOC)
V. Ramifications of Non-Compliance
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2. Sanctions
a. On the Financial Institution (FI)
- restrictions on activities & privileges
- suspension of authorities, privileges
& other activities
- divestment and/or unwinding
- monetary sanctions (penalties/fines)
V. Ramifications of Non-Compliance
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2. Sanctions
b. On Directors and Officers
- reprimand
- restriction on compensation & benefits
- divestment, suspension
- disqualification, removal
- monetary penalties/fines
V. Ramifications of Non-Compliance
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3. Other Supervisory Actions
- initiation into the Prompt Corrective
Action (PCA) framework
- issuance of a cease & desist order
(CDO) against the FI/Directors/Officers
- conservatorship
- placement under receivership
V. Ramifications of Non-Compliance
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VI. Other Ramifications
- exposure to legal, regulatory or
reputational risks
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