Guidelines for the Compliance Risk Management of Commercial Banks (2)
Source: CBRC View: 485 Date: 2011-05-16

Chapter II Compliance Management Functions and Duties of the Board of Directors


Board of Supervisors and Senior Management

Article 8 A commercial bank shall establish a system of compliance management in line with its business scope, organizational structure and business scale thereof.

The following basic elements shall be included in the compliance management system:

(1) Compliance policies;
(2) Organizational structure and resources of the compliance management department;
(3) Plans of compliance risk management;
(4) Recognition of and management formalities for compliance risks; and
(5) Training and education system of compliance.

Article 9 The compliance policies of a commercial bank shall specify the basic principles that all its staff members and operational lines shall comply with and the significant formalities for recognizing and managing compliance risks as well as stipulate the related matters in respect of the functions of compliance management, which shall at least include:

(1) Functions and duties of the compliance management department;

(2) Power limit of the compliance management department, including the right to communicate with any bank staff member and obtain any record or archival file as required in its duty performance;

(3) Functions and duties of compliance management of related persons-in-charge;

(4) All the measures that guarantee the independency of the persons-in-charge of compliance as well as the compliance management department, including a guaranty that there is no interest conflict between the functions and duties of compliance management of the persons-in-charge and related persons that engage in the compliance management and the other functions and duties thereof;

(5) The coordination relationship between the compliance management department and the risk management department, the internal auditing department as well as other departments; and

(6) The establishing of principles of the compliance management departments for the business lines as well as the branches and sub-branches.

Article 10 The board of directors shall undertake final responsibilities of compliance in the business operation of a commercial bank and perform the following functions and duties of compliance management:

(1) Examining and approving of the compliance policies of the commercial bank and supervising its implementation of the compliance policies;

(2) Examining and approving the reports on compliance risk management submitted by the senior management of the commercial bank and appraising the effectiveness of compliance risk management of its commercial bank so as to timely and effectively resolve the compliance defects;

(3) Authorizing the risk management commission, auditing commission or specially established compliance management commission under the board of directors to conduct daily supervision over the compliance risk management of commercial bank thereof; and

(4) Supervising any other functions and duties of compliance management as stipulated in the constitution of its commercial bank.

Article 11 The commission under the board of directors of a commercial bank which is responsible for the daily supervision of compliance risk management shall, by means of holding individual talks with the related persons-in-charge of compliance or by any other effective means, know about the implementation of the compliance policies and existing problems, timely put forward corresponding opinions and suggestions to the board of directors or the senior management , supervise and guarantee to implement the compliance policies effectively.

Article 12 The board of supervisors shall supervise the performance of functions and duties of compliance management by the board of directors and senior management.

Article 13 The senior management shall manage the compliance risks of its commercial bank effectively and perform the functions and duties of compliance management as follows:

(1) Instituting the compliance policies in written form and revising the compliance policies in accordance with the status of compliance risk management as well as the related laws, rules and standards at an appropriate time, reporting them to the board of directors for deliberation and then distributing them to all its staff members after having been approved;

(2) Carrying out the compliance policies, guaranteeing that proper measures for correction be timely adopted when any rule-breaking event occurs and investigating the corresponding responsibilities of violators;

(3) Designating the persons-in-charge of compliance and guaranteeing their independency;

(4) Specifying the compliance management department and their organizational structure, arranging enough and proper personnel of compliance management for its performance of functions and duties, and ensuring the independency of the compliance management department;

(5) Recognizing the significant compliance risks that the commercial bank is faced with, examining and approving the plans of compliance risk management and ensuring the work coordination between the compliance management department and the risk management department, the internal auditing department and other relevant departments;

(6) Submitting to the board of directors a report of compliance risk management on an annual basis, which shall present sufficient proof and assist the members of the board of directors to judge the effectiveness of compliance risk management by senior managers;

(7) Reporting to the board of directors or the commissions thereunder and the board of supervisors any significant rule-breaking event timely; and

(8) Performing any other functions and duties as prescribed by the compliance policies.

Article 14 A person-in-charge of compliance shall coordinate the recognition and management of compliance risks of the commercial bank, supervise the compliance management department to perform its functions and duties in accordance with the related plans of compliance risk management and submit to the senior management an appraisal report about compliance risks periodically.

A person-in-charge of compliance must not take charge of the management of any business lines.

An appraisal report on compliance risks shall include but be not limited to the following contents: any change of compliance risk within the reporting period, the recognition of any rule-breaking event or compliance defect and the measures for correction that have been adopted or are advised to be adopted.

Article 15 A commercial bank shall set up an examination system of compliance performance of managers. The performance examination of a commercial bank shall embody the value concept of promoting compliance and punishing any rule-breaking behavior.

Article 16 A commercial bank shall establish an effective compliance accountability system, strictly carry out the confirmation and investigation of responsibilities incurred from any rule-breaking behavior, adopt effective measures for correction, improve the formalities for management in time, revise the related policies, formalities and operational guidelines at a proper time.

Article 17 A commercial bank shall establish a credit accusation system, encourage its staff members to tip off the illegal acts, the act in violation of professional integrity or the suspicious acts, and fully protect any tip-off reporter.
 

Devott Publications
The Selection of the TOP Global Outsourcing Destinations – China TOP 15 (TGOD China TOP 15) Ended and Its Rankings and Research Reports are Now Available Worldwide