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  • HC-3 HC-3 Compliance officer/manager

    • HC-3.1 HC-3.1 Introduction

      • HC-3.1.1

        In order to promote best practice with respect to banks' internal systems and controls and international banking supervision, the Agency, in this chapter, outlines its requirements for the compliance function of banks. The expression "Compliance Function" in this Chapter is used to describe staff carrying out compliance duties.

      • HC-3.1.2

        The expression 'Compliance Risk', in this chapter refers to the risk of legal or regulatory sanctions, material or financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with laws, regulations, rules, reporting requirements, standards and codes of conduct applicable to its activities, rather than compliance with a bank's internal limits or procedures.

      • HC-3.1.3

        For further information and guidance on compliance risk and the compliance function, banks should refer to the Basel Committee publication, "Compliance and the compliance function in banks" (www.bis.org/publ April 2005). The Agency expects banks to carry out a review of their compliance with the principles in this paper on a regular basis (either by way of a self-assessment or by way of a review by the internal or external audit function).

    • HC-3.2 HC-3.2 Requirement for and approval of a compliance officer/manager

      • HC-3.2.1

        All banks must appoint a senior member of staff with responsibility for the management of compliance risk as their Compliance Officer/Manager.

      • HC-3.2.2

        The compliance function must be independent (i.e. it must not be placed in a position where its other duties or responsibilities may cause a conflict of interest with its compliance risk management responsibilities). Therefore the compliance function must be separate from the internal audit function. The compliance officer or manager may however, perform other limited related compliance roles (e.g. the MLRO or legal advisor), subject to the Agency's prior approval.

      • HC-3.2.3

        The compliance officer/manager must be appropriately qualified and experienced and the compliance function must have adequate resources to carry out its functions effectively.

      • HC-3.2.4

        The appointment of a compliance manager/officer requires the Agency's prior approval and the submission of the appointee's Personal Questionnaire (Appendix LR 2) and Curriculum Vitae to the Agency. The bank must also outline how the compliance function fits into the bank's senior management reporting structure, and must give details of relevant reporting lines within the bank.

      • HC-3.2.5

        In the case of locally incorporated banks, the compliance officer/manager must have access to the Board of Directors in addition to the senior management.