the board of directors’ - accounting research...
TRANSCRIPT
The Board of Directors’ Duty of Oversight: Are
We Doing Enough?
Dato’ Dr Nik Norzrul Thani
AGENDA
• Reporting Structure
• Defined Roles of the Board
• Review Areas
• Initiatives
• Challenges
• Al Rajhi Bank Malaysia Shariah Committee’s
View
REPORTING STRUCTURE
BoardBoard
Risk Risk Management Management
Committee Committee
Head of Compliance Head of Compliance
AML/CFT Officer
AML/CFT Coordinators
Legal & Compliance Legal & Compliance
Department Department
Representatives from Representatives from
all Departments and all Departments and
Branches Branches
Quarterly
Compliance
Report
RMC Report
Reporting to the Compliance
Department to verify AML/CFT
compliance prepared by
AML/CFT Coordinators
Bimonthly reporting to RMC on
AML/CFT Matters prepared by the
Compliance Department
Suspicious
Transactions
Report
Reporting to the Compliance
Department on any suspicious
transactions for the Bank’s
reporting to BNM
Non Compliance
Report
Reporting to the Compliance
Department on any Non
Compliance on AML/CFT Matters
REPORTING STRUCTURE (cont’)
DEFINED ROLES OF THE BOARD IN THE AML
POLICY
• Maintain adequate oversight
• Ensure effective internal controls
• Establish & sign off on policies and procedures
• Review steps are taken to rectify any inadequacies
AML/CFT
Measures
• Define lines of authority and responsibilities
• Ensure separation of duties
• Ensure AML/CFT Officer is appointed
Reporting
Structure
Training • Ensure staff receive adequate training
• Ensure sufficient awareness on staff AML/CFT
obligations
REVIEW AREAS BY RMC
Update on Update on Number of Number of Customers Customers
from High Risk from High Risk Jurisdictions* Jurisdictions*
Number of Suspicious
Transactions
Reports submitted
Number of Suspicious
Transactions
Reports submitted
• Bi-Monthly Review • Ad Hoc Review
Breakdown of Breakdown of High Risk High Risk
Jurisdiction Jurisdiction Customers by Customers by
Branches Branches
Number of Number of freezing freezing
order order received received
Number of Number of freezing freezing
order order received received
AML System AML System Enhancement Enhancement
Update Update
Amendments Amendments made to AML/CFT made to AML/CFT structure and/or structure and/or
policies policies
Audit reports Audit reports or findings or findings
Annual Annual Plan Plan
Update Update
For Illustrative Purposes Only
REVIEW AREAS BY RMC - Samples
AML/CFT INITIATIVES
Redefine High Redefine High Risk Criteria Risk Criteria
Refinements Refinements to Customer to Customer Acceptance Acceptance
Policy Policy
AML/CFT Briefing to AML/CFT Briefing to Branches Branches
AML System AML System Enhancement Enhancement
AML/CFT AML/CFT Awareness Awareness
Week Week
Refinements of Refinements of Customers Customers
Profiling Profiling
Scheduled & Ad Scheduled & Ad Hoc AML/CFT Hoc AML/CFT
Review Review
Development of Development of Demerit System for Demerit System for
Breaches found Breaches found
Initiatives
CHALLENGES
Technology
• Limitation in centralisation of system that can adapt to unique needs of each line of business
• Costly. Systems often have to be developed in-house
Training
• Training courses on relevant AML trends and practices are limited and costly
People
• Scarce resource and skill set availability to monitor suspicious transactions
• Resistance from business that tend to focus on sales targets and consider AML/CFT procedures as a hassle
• Difficulty in defining ownership for cross products customers
• AML/CFT and general compliance efforts not made priority, often interpreted as non-profit making and costly
ARBM SHARIAH COMMITTEE’S VIEW
Investigation
Order
Treatment of Funds under Investigation Order, Freezing of Accounts and Seizure of Funds
• The Bank may continue to invest the deposits and gain profit from the investment based on the legal maxim, “A person is presumed innocent until proven guilty” for all
types of accounts.
• The Bank may continue to invest deposits under Qard account
• The Bank must cease to invest deposits under other types of accounts such as Mudharabah fixed investment
Order to
Freeze
Accounts
• The Bank must cease to invest the deposits under Qard from
the effective date of notice. All modes of investment for all types of accounts are forbidden
Notice to
Seize
Funds
THANK YOU