News Column

Banks Cautioned Against Rising Compliance Risk

September 4, 2014

Obinna Chima



In order to protect stakeholders' value in their institutions,Managing Director/Chief Executive Officer, Heritage Bank Limited, Mr. Ifie Sekibo has advised banks to curtail the current rising cost of compliance in the industry.

Sekibo made this call in a goodwill address to members of the Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN) at the August edition of the monthly meeting.

In a statement, the Heritage Bank boss noted that compliance function has been elevated to play a pivotal role in the sustenanceof stakeholder value in the banking sector, adding that compliance risk has become a core risk in banking business.

Sekibo pointed out that every time a bank pays penalty for compliance infraction, value is destroyed.

"The business, regulatory and legal landscape around the globe is increasing in complexity while the scrutiny by the banking public, law enforcement agents and regulatory bodies is intensifying. "Meanwhile, financial institutions now have to grapple with the rising cost of compliance breaches and the underlying risk of reputation damage," he added. Furthermore, he stressed the need for banks to adhere to increasing regulatory requirements and address stakeholders' expectations.

Sekibo however commended CCCOBIN's efforts in ensuring a healthy banking sector in the country through its numerous interventions and tasked the body not to relent in getting the sector off to a healthier state.

He insisted there are operational issues that compliance officers need to handle to get the organisation to the 'promised land'.

While identifying internal stakeholder knowledge gap as a great problem besetting the banking sector, the Heritage Bank boss also urged bank officials to re-examine their relationship with other staff members within their organisations who view compliance professionals and their activities as a pain rather than a value enhancer.

"The failure of all internal stakeholders to recognise that a regime of compliance failure destroys value and that compliance frameworks around liquidity, credit, operations, treasury and other departments are designed to enhance value remains a big threat.

"It is people and not institutions that fail to comply. The depth of trust deficit existing between compliance officers and the larger staff has some part to play in the people risk and knowledge gap that local and global financial institutions currently face; compliance officers therefore need to do more to reduce this trustdeficit to such levels that can promote greater incentive to comply more without coercion," he said.

Earlier in his opening remarks at the event, CCCOBIN Chairman who is also the Chief Compliance Officer of Access Bank, Pattison Boleigha pledged the commitment of the body to thesanitisation of the nation's banking sector in order to deliver maximum value to all stakeholders.


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Source: AllAfrica


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