Big banks required to hire full-time independent compliance officers

Big banks have been required to appoint full-time independent compliance officers whose only job would be to ensure compliance with the standards, rules and regulations of the Bangko Sentral ng Pilipinas (BSP).

The BSP said yesterday that the Monetary Board has decided to tighten its existing rules on the compliance function of banks, raising the bar on corporate governance among banks as well as quasi-banks (QBs).

The BSP explained that under existing rules, universal banks and commercial banks (UBs/KBs) are required to appoint an independent full-time compliance officer with the rank of at least a vice president.

The compliance officer was to have the principal function of overseeing the institution’s compliance with applicable laws, rules and standards.

On a case-to-case basis, the BSP said these banks are allowed to designate an incumbent senior officer, including the Internal Auditor, as the bank’s compliance officer.

This provision, however, was provided that the person appointed to the positions would have no conflict of interest and that his main function would to act as the bank’s compliance officer.

For other types of banks such as thrift banks (TBs), rural banks and cooperative banks (RBs/Coop banks) as well as QBs, the BSP allowed the appointment of an incumbent senior officer concurrently as compliance officer provided, with the same caveat.

Under the new rules, however, the BSP said all UBs/KBs, as well as TBs, RBs/Coop banks and QBs with total resources of P500 million and above would now be required to appoint an independent full-time compliance officer.

The appointee, according to the BSP, would have the rank of at least a vice president or its equivalent and his only task would be to oversee the institution’s compliance with BSP rules, standards and regulations.

“It is viewed that with at least P500 million in total resources, said institutions should already be able to afford the appointment of a full-time independent compliance officer,” the BSP said. 

On the other hand, TBs, RBs/Coop banks and QBs with total resources of below P500 million would still be allowed to designate an incumbent senior officer, including the internal auditor, concurrently as the bank’s compliance officer.