This Policy outlines FDB’s measures to mitigate and manage compliance risks, integrity risks, conflict of interest and the prevention of and (fight against) fraud and corruption, including money laundering and terrorist financing, in all its operations and activities.
As Financial Institution (FI) entrusted with public monies FDB Bank strives to carrying out its operations with the highest integrity and in compliance with the Law of Union of Myanmar, Financial Institution Law (2016), Bank’s own rules and International best practices. Prevention is at the forefront of the FDB Bank. Although non-binding, this document is built on the recommendations from the Basel Committee on Banking Supervision.
1.2. Conflict of Interest
Managing these conflicts of interest effectively is essential to protect the Bank, customers and other stakeholders. The objective of the Conflicts of Interest Policy is to enable the Bank’s employees and members of the Board of Directors to easily identify, prevent, and manage conflicts of interest during their employment with FDB Bank. This Policy includes examples that may arise together with minimum standards and principles for identifying and managing conflicts of interest.
The Policy applies to the Board of Directors, all employees, all functions and all units in FDB bank as prescribed in the Financial Institution Law (2016) and related instructions from the CBM.
1.3. Anti-Corruption (Code of Conduct)
The Bank is committed to fight corruption. For this purpose, the Bank has established a zero tolerance towards corruption.
The Compliance Officer investigate corruption. Suspicions and allegations of Prohibited Practices shall be reported to Chief Compliance Office. The Speaking-up and Whistleblowing Policy covers the protection of staff members and other stakeholders who report suspected wrongdoings.
The Board of FDB has made it a mandatory requirement for FDB staff to be trained with Anti- Corruption policy and recognition of each staff to said policies before they are confirmed as permanent staff.
2. Compliance Principles
FDB is committed to follow best practices and market standards in areas of accountability, governance, corporate social responsibility (CSR), transparency and business ethics to promote sustainability.
To manage these risks, the BOD of FDB Bank has established an independent Compliance Function (hereinafter referred to as Compliance Function) which is headed by the Chief Compliance Officer (CCO) or Individual assigned by the board who is reporting to the Bank’s Executive Committee and has unrestricted access to the chairpersons of the Board of Directors and the Compliance Committee.
2.1. General Principles
Compliance is commonly defined as the adherence to laws, regulations, rules, related self regulatory standards and codes of conduct in matters concerning observing proper standards of market conduct, managing conflicts of interest and specifically dealing with matters such as the prevention of money laundering and terrorist financing, and investigations of suspected and alleged corrupt and fraudulent behavior.
Compliance risk is the risk of legal or regulatory sanctions, material financial loss, or loss to reputation that an entity may suffer because of its failure to comply with compliance laws, rules and standards. The Following are key areas the BOD has determined to be strategic areas for Compliance Function to monitor;
- Institutional compliance includes issues of the Bank’s reputation, governance, internal structure and decision-making processes, principles of procurement, principles of Corporate Social Responsibility (CSR), public information disclosure, sustainability reporting and adherence to internal instructions.
- Operational compliance includes the assessment of integrity risk and reputation risk in the Bank’s transactions, in particular by following certain principles, such as Know Your Customer (KYC), conducting integrity due diligence checks, including assessing risks relating to Money Laundering (ML), Terrorist Financing (TF) and tax fraud as well as compliance issues in relation to the development of new products/ services or business practices. Borrower compliance and integrity risks are related to the Credit/Business relationship that the Bank is engaged in and to the stakeholders that FDB is working with.
- Conduct compliance includes risk in terms of conflict of interest, self-dealing, fraud and other issues related to the professional conduct of members of the Bank’s management and staff. FDB mitigates and manages conduct risks by fostering an environment of high integrity and ethical values among its staff and stakeholders. Codes of conduct have been established for the Bank’s staff, the Board of Directors, and Senior Management.
The Bank aims at promoting a culture of integrity and high ethical standards throughout all levels of the Bank. Internal integrity risks are managed and mitigated through the codes of conduct for staff, the Board of Directors and Senior Management and members of the Control Committee. External integrity risks are managed and mitigated through the application, antimoney laundering (AML) and counteracting financing of terrorism (CFT) rules and KYC Policy.
2.2. Control Structure
In accordance with strong corporate governance practices, The Bank shall maintain a structure of good governance within the Bank, particularly through transparent policies and rules, as well as clear divisions of responsibilities to ensure accountability.
The Board of Directors has the ultimate responsibility for ensuring that compliance and integrity risks are managed and approves the Bank’s policies relating to compliance, integrity, conflict of interest, anti-corruption and investigations.
The Compliance Committee is the Bank’s supervisory body chair by Chief Executive Officer. The Compliance Committee shall ensure that the operations of the Bank are conducted in accordance with the Statutes including monitoring the Bank’s anti-corruption and compliance practices, general compliance with the Bank’s internal guidelines, and, implementation of best practices in governance of the Bank.
The Compliance Committee shall ensure that the Bank’s compliance and integrity risks are properly managed and shall inform the Board of Directors concern with integrity risks in the Bank’s activities, including identified integrity concerns in proposed lending operations.
Chief Compliance Officer (CCO) shall ensure that the Bank’s compliance and integrity risks are identified and addressed by overseeing the integrity due diligence process to ensure that client and other counter party related integrity risks are identified and addressed as well as promoting the highest ethical standards, integrity and behavior of the Bank’s staff and other stakeholders.
Compliance Department investigates cases of non-compliance with the Bank’s own policies in matters relating to prohibited practices, misconduct, complaints and whistleblowing. Investigations by CCO or any other appointed person or entity shall be conducted in accordance with the Investigation and Enforcement Policy. CCO also addresses conduct related risks by training of the Bank’s staff and members of governing and supervisory bodies.
Compliance Department coordinates its control activities with the Bank’s Risk Management Unit and Internal Audit. The Bank’s three lines of defense constitute: Operations Departments are the first line of defense, Compliance Department and Risk Management Department are the second line and Internal Audit the third line of defense.
3. Compliance Department
Compliance Department shall protect the integrity and reputation of the Bank, promote high ethical standards, strengthen accountability and increase transparency. CCO oversees the identification, assessment and monitoring of integrity risks. This includes ensuring that FDB at all times has up to date codes of conduct & Employee Handbook to guide good behavior of staff, management and members of the governing and supervisory bodies, including the requirements of declaring their financial and business interest.
Compliance Department investigates cases of suspected or alleged Prohibited Practices and misconduct as well as complaints regarding non-compliance with the Bank’s policies and procedures. Compliance Department shall ensure that the Bank’s integrity related policies and rules are up to date and in line with international standards.
3.2. Basic Functions
FDB shall have an effective compliance function with sufficient independence, status and authority, including access to information and independent reporting to carry out its duties.
The compliance function is an integral part of the Bank’s organization and CCO will always seek to cooperate with other functions and rely on contributions from other departments or units in the Bank. However, in all cases, CCO will retain its independent coordinating role with respect to monitoring and report directly to the Board’s Compliance Committee.
Compliance Department shall have a formal status in the Bank and shall be able to carry out its functions on its own initiative (including using outside expertise) without obstruction and fear of retaliation from management and other staff members.
The Chief Compliance Officer (CCO) and CCO staff members shall not engage in any activities of the Bank that could create a conflict of interest between the Bank’s operations and CCO’s duties and activities.
The CCO shall report functionally and administratively to the CEO/MD and shall have unrestricted access to the Chairperson of the Board of Directors and to the Chairperson of the Compliance Committee Compliance Department is subject to audits by Internal Audit.
Compliance Department shall have access to information, premises and staff necessary to carry out its responsibilities, including access to departments, units and teams for the purpose of discharging its duties. Compliance Department shall have full and free access to all levels of management, including the Board of Directors, Senior Management, and to the external auditors.
Compliance Department shall, in compliance with applicable rules of the Bank, also have access to any information, records or files, it deems necessary for carrying out its duties. This includes any information that is the Bank’s property, in the Bank’s custody, under the Bank’s control or subject to the Bank’s right of inspection or audit as defined in agreements with third parties. Information accessed by Compliance Department shall be handled in the same prudent and confidential manner as required from those persons who are normally accountable for such information and documents.
The CCO will inform the Senior Management, the Board of Directors and the Compliance Committee of matters of importance regularly and as they occur.
In addition to the follow-up on its annual business plan, CCO also reports on its work plan and activities directly to the Board of Directors once a year and to the Compliance Committee at its regular meetings.
3.5. Compliance Office’s Responsibilities
The overall responsibility of CCO is to assist the Bank in identifying, assessing, monitoring and reporting on compliance and integrity risks. By this CCO contributes in an independent manner to the overall risk management of the Bank in protecting the integrity and reputation of the Bank, including its Board of Directors, management, and the staff and to strengthening the Bank’s accountability and transparency.
In carrying out its responsibilities, CCO works closely with a number of other functions in the Bank. CCO and the CCO: –
- Advises the President and senior management on corporate governance, relevant rules, standards, recommendations and practices in the market place with special focus on compliance activities. This covers Anti Money Laundering (AML) and terrorist financing (CFT), Prohibited Practices, including fraud and corruption, prevention of conflicts of interest, protection of confidential information, and, fair and equitable behavior towards stakeholders.
- Provides training on compliance issues to raise awareness of integrity and business ethics by arranging seminars as needed and by acting as a contact point for queries from staff members.
- Gives independent advice to management on integrity concerns in the Bank’s operations and activities and assists in the Internal Audit process.
- Recommends and comments on policies, guidelines, rules and procedures with the aim of minimizing integrity and reputational risks.
- Interprets the code of conduct and assists staff with guidance to the proper management of conflicts of interest.
- Carries out investigations in accordance with the FDB Bank’s Internal Policy FDB vii. Follows up on the implementation of decisions resulting from investigations.
- Monitors compliance with the internal policies, procedures and guidelines in matters relating to prohibited practice, misconduct, ethical standards, integrity and complaints, including testing and checking the functionality, efficiency and adherence of established policies.
- Liaises and coordinates with internal and external functions in matters of compliance and managing compliance risks.
- Carries out the investigation of whistleblowing matters.
4. Assessment & Review
The Board of Directors has a responsibility to ensure that the Bank has adequate policies and guidelines to avoid to the extent possible any conflicts of interest, corruption and non-compliance matters between FDB bank and any member of the Board of Directors and any other employee of the Group.
The compliance committee has a responsibility to establish and implement guidelines and procedures to identify actual and potential conflicts of interest, corruption and non-compliance matters across the Bank.
Chief Compliance Officer and Compliance Departments are responsible for identifying, preventing, and managing conflicts of interest, corruption and non-compliance matters in their area of responsibility by implementing this Policy and by adopting and implementing necessary supplementary procedures and guidelines where needed.
Further, Chief Compliance Officer and Compliance Departments are responsible for ensuring that their employees are familiar with the Policy and that they complete the relevant awareness training.
This Policy is reviewed annually and with the approval of the Board of Director.