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Emergence of the Association of Compliance Officers of Banks – Sri Lanka

INITIATION

With the introduction of the Prevention of Money Laundering Act and the Financial Transactions Reporting Act that required Financial Institutions to have in place a Compliance Officer who is responsible for establishing procedures and systems  in respect of Know your Customer, Customer Due diligence, training, retention, reporting  etc. Even though obligation to have in place a Compliance Officer was required by the Central Bank of Sri Lanka as far back in 1997, these new Acts imposed statutory obligations on the Financial Institutions to have in place a compliance function especially in respect of Anti Money Laundering Measures.

This was further intensified with the establishment of Financial Intelligence Unit under the FTRA and with the issuance of meticulous Know Your Customer Circular in 2006. New requirements on establishing KYC procedures and continuous due diligence measures detailed in the circular laid the initial milestone for the establishment of a union among compliance officers with banks.  Thus several compliance officers of local banks met to discuss the way forward with the new regulations and to put in place a level playing field with respect to customer information.

This was pioneered by Mr. R M P Rathnayake at HNB, Mr. Stanley Fernando from Commercial Bank, Ms. Summaiya Macan Markar from Peoples Bank, Ms.  Ruwani De Silva from NDB, Mr. Prasanna Kannangara from DFCC etc. to name a few pioneers. This forum was later formed as the AML Officers’ Association and acted as the driving force to bring the industry compliance officers in one track in respect of AML/KYC compliance.

Bringing in the industry onto a standard on KYC information through a common KYC information form/mandate that was adopted by all the banks with fewer customizations, can be identified as the most significant achievement by the Association. Further, it managed to successfully evaluate AML software for the industry as a collective effort with the help of a technical committee, comprising of IT specialists of Banks as well.

NEXT PHASE

After the success story of the common KYC form and the Software, Compliance officers felt the need to continue with the forum in a more formal manner by expanding its scope beyond AML compliance to all aspects of regulatory compliance, in order to face the emerging challenge of the ever-increasing regulatory horizon. It was unanimously agreed that sharing of experiences would help the effectiveness of the compliance function which would in turn support betterment of the industry and aspire objectives of the regulators. Thus in March 2010, the Association of Compliance Officers of Banks was formed as a more formal association with the following main objectives;

  • Provide a forum to promote common understanding among Compliance Officers on regulations.
  • Share experiences and knowledge across banks in building an effective compliance systems and procedures.
  • Plan and organize training programs in the field of compliance.
  • To reach a consensus among the membership, with regard to the approach to be taken with the regulators when negotiating and conducting ongoing dialogue.

Mr. Prasanna Kannangara was elected as the first president of the Association and established several key posts which wer to be elected each year at the Annual General Meeting. A formal constitution was drafted, agreed and adopted to formalize its functions in a more transparent manner. In the year 2012, members of the Association agreed that in order to further strengthen the association and achieve its objectives effectively, it was required to raise funds. Thus, the association decided to collect an annual membership fee from its members.  This was favorably accepted by Banks and presently almost all of the Local Licensed Commercial Banks, Licensed Specialized Banks and branches of Foreign Banks are members of the Association.

Since its initial formation to the present, following are the key highlights of the Association.

  • Organizing monthly meetings for the membership to discuss and share compliance experiences
  • Organizing guest lectures by eminent speakers on Exchange Control, Related Party Transactions, FATCA, General Compliance and AML compliance, such as Mr. Manil Jayasinghe – Partner E&Y, Ms. Pavithri Viathanage – Director ECD (then), Mr. Anath Krishnan – Regional Head Training SCB
  • Successfully negotiating with FIU on amendments to the KYC gazette issued in March 2011.
  • Invited to represent the Banking industry for the FATF country evaluation.
  • Time-to-time discussions with the CBSL departments such as Bank Supervision, Exchange Control, FIU etc.
  • Paving the way for industry discussion on FATCA compliance and arranging a shared consultancy for majority of the member banks.
  • Arranging sessions for compliance officers regarding different software tools that support effective compliance function through technology.
  • Presently converging on a fully-fledged risk-based compliance program training for the Compliance Officers, as required under Basel Recommendations.

Compliance in the Banking Sector has endured a formal status within Banks, and Compliance Officers have been identified to be among the key executive functions within the bank which emphasizes the vital importance placed in this function. Challenges posed by ever-expanding regulations that reach far beyond national territories, meeting expectations of regulators and striking the balance between compliance and business is becoming a daunting task for Compliance Officers. Thus, it is essential that, in order to have an effective Compliance Function, sharing experiences, enhancing knowledge on international best practices, continuous dialogue with all stakeholders is vital at industry level. In this regard, the Association of Compliance Officers of Banks has taken few steps and will continue to march on as a team within the industry to build effective compliance cultures within each bank.

ASSOCIATION OF COMPLIANCE OFFICERS OF BANKS

THE PRIMARY OBJECTIVES OF THE ASSOCIATION SHALL BE TO,

  • Provide a forum for discussion of compliance issues
  • Represent the views and, where necessary, negotiate on behalf of members in dealing with relevant authorities
  • Undertake, promote and facilitate studies and discussions in the field of compliance in banking and allied subjects within and outside Sri Lanka.
  • Organize and promote research and undertake studies in the field of compliance.
  • Plan and organize teaching and arrange training programmes in the field of compliance in banking and allied subjects.
  • Promote understanding, cooperation and friendship with similar associations within and outside Sri Lanka.
  • Undertake, promote and conduct on its own initiative or in collaboration with local or foreign associations such surveys and studies on compliance in banking in Sri Lanka or any other country or region of the world.
  • Promote fellowship and understanding among members of the Association.
  • Affiliate with any National, Regional or International Associations in related fields and with cognate aims.
  • To reach a consensus among the membership with regard to the approach to be taken when negotiating with regulatory authorities on new laws and regulations that are enacted.
  • Serve as a focal point for bringing issues faced by Compliance Officers to the attention of the CBSL, through close coordination with Sri Lanka Banks Association (SLBA) when and where possible.
  • Engage in any other activities connected with or incidental to the above objectives.
2017-2018
President – Chaya Gunarathne – Union Bank
Secretary – Samanthi Senanayake – People’s Bank
2016-2017
President – Chaya Gunarathne – Union Bank
Secretary – Samanthi Senanayake – People’s Bank
2015-2016
President – Bhanu Wijayaratne – HNB
Secretary – Chaya Gunarathne – Union Bank
2013- 2014
President – Summaiya Maccan Markar – HSBC Bank
Secretary – Poornima Perera – Axis Bank
2012-2013
President – Summaiya Maccan Markar – HSBC Bank
Secretary – Amendra De Silva – NDB Bank
2010-2011
President – Prasanna Kannangara – DFCC Bank
Secretary – Bhanu Wijayaratne- HNB
2007-2010 (AML Officers’ Association)  
President – Premasiri Rathnayake – HNB
Secretary – Kamal Abeysinghe – Sampath Bank

Member Banks List