Compliance Report
The Bank has a dedicated Compliance Department which supports its priorities of safeguarding its reputation and operating licenses in addition to the functions assigned by CBSL which has mandated the effective functioning of this department.
A key area of focus in 2024 was the preparation for the third mutual evaluation of the country on Anti Money Laundering standards which will be facilitated by CBSL and APG planned for 2025. Key officials from the Compliance Department participated in the training conducted by CBSL and the Association of Compliance Officers of the Banks in Sri Lanka. Negative observations arising from the review can have significant consequences for the country in the form of sanctions and downgrades and the industry is working closely with the regulator to ensure a positive outcome.
CBSL issued a new directive on Corporate Governance in September and October 2024 with target dates for compliance, further strengthening corporate governance of banks.
CSE had issued a new Listing Rule No. 9 on Corporate Governance which significantly strengthened governance of public listed entities. Compliance with provisions was progressive commenced from October 2023 to 1st January 2025 with most rules becoming applicable by 1st October 2024.
The Ministry of Defence also revised the local list of terrorist organisations during the year. Additionally, the Bank remained vigilant about frauds and thefts as the industry identified the related risks remained elevated.
2024 Highlights
- Preparations for third mutual evaluation of the country on Anti-Money Laundering standards
- CBSL issues new directives on Corporate Governance
- More provisions of CSE Listing Rule No. 9 became effective in 2024
- Strengthened compliance team
- Enhanced controls on Transaction Monitoring System
Focus on Training
The Bank recognises the importance of the third mutual review of the country on Anti-Money Laundering standards and is rigorously preparing for a successful outcome from the review. Accordingly, the Bank is updating the knowledge of officers across the organisation to strengthen the country report and ensure implementation of recommended remedial action in readiness for the review. Additionally, the first line of defence was strengthened to combat the increased risk of fraud and theft.
Strengthening Governance
Following the issue of the new CBSL guideline, the Board was apprised of the necessary changes and a road map for compliance has been drawn up facilitating compliance by the due dates. It is noteworthy that high standards of governance maintained by the Bank resulted in a relatively short list of non- compliances. The Bank is fully compliant with the CSE Listing Rule No. 9 at the close of the year. Additionally, the Bank has made the necessary changes in its systems to accommodate the updated list of terrorists in its systems.
Focus on Customer Awareness
The Bank increased focus on customer awareness of online safety and fraud prevention in response to elevated threats
as many fraudsters prey directly on the customer. Several campaigns were carried out on print and social media to alert customers of potential risks and remedial actions.
A Competent and Effective Team
Relatively high numbers of new employees and the increasing compliance risks related to roll out of digital products necessitated the focus on building the knowledge and capabilities of the Compliance Department. Accordingly, employees at all levels are provided with awareness sessions/training programmes
on related regulatory requirements conducted by the Compliance Department on continuous basis to educate the team. Recruitment also proved a challenge due to diminishing talent pools across the industry and significant efforts were made to attract the right talent with the requisite knowledge, experience, attitudes and behaviours.
External Reviews
As instructed by CBSL, Bank's transaction monitoring system was reviewed by the external auditor (Ernst & Young) to identify any gaps in the current system and improve the effectiveness of the transaction monitoring system.
The main priority for the year ahead will be the mutual evaluation of the country's anti- money laundering standards. The Bank will also be fine-tuning its transaction monitoring systems in line with recommendations of the external auditors. Training on compliance related matters for front line and operational staff as well as capacity building of our team will continue to ensure that the Bank safeguards its reputation and operating license.