group legal compliance policy - blom bank · 3 group legal compliance policy| group compliance...
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2 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
Contents
1. Introduction ..................................................................................................................................... 3
1.1 Objectives ............................................................................................................................... 3
1.2 Scope ....................................................................................................................................... 3
2. Regulatory System .......................................................................................................................... 4
2.1 Overview ................................................................................................................................. 4
2.2 The legal and institutional Framework ................................................................................... 4
2.3 Compliance Goals ................................................................................................................... 5
2.4 Requirements of the Group Compliance Division .................................................................. 5
2.5 Legal Entity Identifier ............................................................................................................. 6
3. Legal Compliance Function ............................................................................................................ 7
3.1 Regulatory Unit ....................................................................................................................... 7
3.2 Foreign Tax ........................................................................................................................... 11
3.3 Banking Relation .................................................................................................................. 11
3.4 Compliance Control .............................................................................................................. 12
3 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
1. Introduction
1.1 Objectives
The BLOM Bank Group, its local and foreign branches and subsidiaries, all together referred
to “BLOM Group”, is committed to set out the Compliance policies and procedures operated
by BLOM Group in order to ensure its Compliance with the Financial Services, Central
Banks and any related body’s laws, circulars and Regulations (“the Regulators”).
These policies and procedures have been prepared to fit the size, type and complexity of the
operations of the Bank, on the basis of the permitted financial services and activities and will
be updated from time to time to reflect any change in line with international and local legal
and regulatory requirements.
Any changes to these policies and procedures will be approved by Compliance Board
Committee before implementation.
1.2 Scope
BLOM Bank S.A.L, called hereafter (BLOM Bank) together with its subsidiaries and
associated undertakings, (collectively “BLOM Group”) provides trade finance, commercial,
corporate, Islamic, retail, private and investment banking services in seven markets in the
Middle East, namely Lebanon, Jordan, Egypt, Qatar, Saudi Arabia, UAE and Iraq. Outside
the Middle East, BLOM Group have branches and subsidiaries in London, France,
Switzerland, Cyprus and Romania. BLOM Bank is headquartered in Beirut, Lebanon.
The Group Compliance Division is responsible for overseeing BLOM Bank’s systems and
controls for compliance with legislation applicable in Lebanon and the countries where
branches and subsidiaries operate.
The Group Compliance Division has unrestricted access to all relevant records. In addition,
the Head of Group Compliance Division has direct reporting line to the Chairman and the
Compliance Board Committee.
The Group Compliance Division shall monitor the activities of any other internal function,
which may from, time to time, determine falls within the scope of its responsibilities.
4 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
2. Regulatory System
2.1 Overview
The Lebanese banking industry is financially sound and stable. It plays key roles in the
Lebanese economy where banks continue to dominate the financial system of the country and
are major providers of credit to individuals and businesses.
Banks and other financial institutions in Lebanon fall under the jurisdiction of Banque Du
Liban (BDL), the country's central bank, which is BLOM Bank regulatory authority. BDL
controls the Banking industry, defines the scope of banking activities and sets prudential
regulations and codes of practice for banks.
The Banking Control Commission of Lebanon (BCCL), established in 1967, is the bank
supervisory authority. It is responsible for supervising banking activities and ensuring
Compliance with the various financial and banking rules and regulations.
The Special Investigation Commission (SIC), established in 2001, Lebanon’s Financial
Intelligence (FIU), receives, analyzes, investigates suspicious transaction reports (STRs) and
ensures compliance with the AML/CFT regulations.
The Capital Markets Authority (CMA), established in 2012, regulates and develop the
Lebanese Market and creates an appropriate investment environment, boost confidence and
reinforce transparency and disclose standards, moreover protect the investors and dealers
from illegal acts in the market.
Overall banking activities are also subject to both the Code of Commerce (1942) and the
Code of Money and Credit (1963).
2.2 The legal and institutional Framework
BLOM Bank is authorized by the Central Bank of Lebanon (BDL) and governed by the
Lebanese Laws and statutes. As BLOM Bank is registered, authorized and based in Lebanon,
therefore its legal compliance follows the BDL circular No. 128 dated 1st of January 2013
which applies to all branches and related affiliations situated within the Lebanese borders.
Subsidiaries, related entities and foreign branches are subject to a different regulatory regime
depending on the country in which the subsidiary or branch are regulated.
5 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
2.3 Compliance Goals
BLOM Group maintains an independent Compliance function, including the following:
- Ensure Compliance with applicable requirements and standards under the
Regulatory System linked to International and local laws and regulations in force
and;
- Reduce, so far as possible, the risk that BLOM Group may be used for criminal,
fraudulent or dishonest purposes including insider dealing, market abuse or
handling the proceeds of crime
2.4 Requirements of the Group Compliance Division
The Group Compliance Division must meet the following requirements:
- Work and activities are totally independent from the other activities of BLOM Group and
any of their departments and units, including the Internal Audit and the Legal, provided no
executive tasks or any other mission within BLOM Group is assigned to the Group
Compliance Division Staff.
- Staffed with the proper employees whose number and qualifications are commensurate with
the size of BLOM Group, the diversification of the activities and the complexity of the
operations.
- The employees have diversified qualifications and expertise, in line with their mission,
along with a thorough understanding of banking and financial laws and regulations.
- Granted sufficient powers to be able to perform its duties, particularly in terms of
preventing the breach of laws and regulations in force.
- Have access to any officer or unit / department in BLOM Group, and to the necessary files
and information, so as to enable its staff to fulfill their duties properly.
- Its Compliance heads have access to the Senior Management and the Board of Directors.
- Its Compliance heads attend the meetings held by specialized committees and Board
committees, in order to be informed of the BLOM Group strategic planning and prospective
activities and products, so as to provide an early counseling.
- Its Compliance heads have direct access to the officers in charge in Central Bank, the
Financial Intelligence Unit and any other specialized body, in order to inquire, whenever
needed, about any issue relating to compliance with laws and regulations in force.
6 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
2.5 Legal Entity Identifier
As per the Financial Stability Board (FSB) endorsed by G-20 in collaboration with SWIFT
applied on financial services firms aimed to achieve a unique worldwide identification of
parties to financial transactions and creating a common system of identifiers, Therefore,
BLOM Bank SAL together with its subsidiaries and associated undertakings must obtain a
Legal Entity Identifier Number by a self-registration based on the below:
The Legal Entity Identifier (LEI) is an alphanumeric code that consists of 20-character
reference code to uniquely identify legally distinct entities that engage in financial
transactions and associated reference data. The reference data stored on the LEI data base for
each entity includes:
The official name of the legal entity;
The address of the headquarters of the legal entity;
The address of legal formation;
The date of the first LEI assignment;
The date of last update of the LEI;
The date of expiry, if applicable;
For entities with a date of expiry, the reason for the expiry should be recorded, and if
applicable, the LEI of the entity that acquired the expired entity;
The official business registry where the foundation of the legal entity is mandated to
be recorded on formation of the entity, where applicable;
The reference in the official business registry to the registered entity, where
applicable.
ENTITIES LEI
BLOM Bank SAL 549300ERAZEQ2KEJ8L86
BLOMINVEST Bank SAL 5493009OYFGGCKNUED05
BLOM Development Bank SAL 5493006RVNNQ4VVP1V75
BLOM Bank (Switzerland) SA 5493006FFXSAIC08WD49
BLOM BANK FRANCE 9695007EQZDL89LUW373
Blom Bank S.A.L. - Branch (JO) 54930066X06YD4ZNGA14
BLOM Bank Egypt SAE 549300TMW8J2530CEN05
BLOM BANK FRANCE SA PARIS
SUCURSALA ROMANIA
315700Y6DVCKDWJ1EO95
BLOM Bank Qatar 549300CEYDGRIHEM9C63
AROPE Insurance S.A.L 549300TWDBBG1KOY1139
Blom Bank France - Branch (AE) 5493005ZHVPXIYM46X73
7 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
3. Legal Compliance Function
3.1 Regulatory Unit
Our banking activity (BLOM Group) is governed by different legislations that place a range
of obligations on BLOM Group and its employees throughout the world. Consequently,
BLOM Group manages its business responsibly and in compliance with the statutory and
regulatory requirements of the countries in which it operates. The Regulatory unit formally
affirms the bank’s commitment to the regulatory law and establishes a legal compliance
framework to proactively support and assist the bank and its personnel to more confidently
manage the obligations imposed by law that impact on the bank’s activities. Its main duty is
to ensure that any non-compliance is readily identified, documented, reported and promptly
acted upon. Any breaches reported in the course of compliance monitoring are documented
for the purpose of reviewing trends and amending, if necessary, the relevant procedures.
The primary role of the Legal Compliance function is to monitor BLOM Bank’s compliance
with the legislation applicable in Lebanon and countries where subsidiaries and branches
operate and to report any breach to the General Management and Board of Directors through
a reporting mechanism and the Board Compliance Committee. The legal compliance is
responsible for advising and assisting the Board of Directors, General Management and
Board Compliance Committee in the design and implementation of appropriate Compliance
policies, procedures, systems and controls.
The Legal Compliance verifies that necessary licenses, authorizations and consents are
obtained; oversee the submission of periodic reports and returns; and provide information
upon request.
The legal compliance framework is a three steps process that:
Identification Prevention Work
Program
8 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
The legal compliance function is designed so as to cover the below:
The legal compliance register
Compliance Verification Checklists with the laws, regulations, procedures and directives
issued by the Central Bank, Banking Control Commission, Capital Markets Authorities, the
Financial Intelligence Unit and any other relevant body across the legislations of the Group.
Internal Administrative Instruction register
Assess the efficiency of the procedures and internal administrative instructions applied by
BLOM Group to detect any violation or breach and supervise that the mechanism in place
appraises the developments at the Group. Ensure that operational compliance risk is managed
in an appropriate and integrated manner across the Group.
New products/services
Identify and assess non-compliance risks associated to the activities BLOM Group,
particularly non-compliance risks linked to new products and activities.
In general, a bank’s compliance risk exposure is increasing when a bank engages in new
activities or develops new products; enters unfamiliar markets; implements new business
processes or technology systems. The Bank should ensure that its compliance control
infrastructure is appropriate at inception and that it keeps pace with the rate of growth of, or
change to, products activities, processes and systems.
New laws and circulars
Update regularly the legal compliance register with the new laws and regulations in force and
notify the concerned unit/entity of the latest developments (e.g. Rules, standards,
recommendations and practices in the market place).
Identification Identification and classification of legislation that impacts and affects
the bank – Maintain the legislation Database.
Prevention Provide advice and guidance to all areas on regulatory compliance
matters; Provide high-level regulatory compliance education and
framework training where appropriate.
Work
Program
Administer the legal compliance register and reporting system;
Monitor all identified and potential regulatory compliance matters and
ensure that an action plan is implemented.
Annual Compliance verification checklists sent to all Bank area
activities.
9 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
Training and testing
Prepare efficient compliance training program for BLOM Group employees and written
directives in the form of a compliance guide that instructs the employees on the
implementation of the laws and regulations in force.
In accordance with the Legal Compliance Unit / Department, the Human Resources Division
will perform adequate tests to verify compliance by the BLOM Group employees with the
policies & procedures and administrative instruction in addition to the above compliance
guide.
All records and materials are kept at the Human Resources Division’s premises.
Agreement and Contract
Any agreement or contract signed by BLOM Group are reviewed by the Legal Compliance
Unit / Department in order to tackle any breach of a non-compliance risk with banking
practice, laws and regulations that might lead the bank to a potential Legal Compliance Risk.
Bank’s Policies & Procedures
BLOM Group Policies & Procedures are reviewed by the Legal Compliance Unit/
Department in order to check and detect any breaches along with any weaknesses in the
implementation of laws and regulations in force; and reflect in case the need of setting or
developing additional Policies & procedures necessary for the activities of the Group.
Moreover, the regulatory unit assesses the efficiency of the procedures applied to detect any
violation or breach.
Customer Complaints
BLOM Group has set a clear mechanism to ensure that claims are handled and settled in a
short timely manner. The claim could be submitted in different ways (personally, claim box,
ordinary mail, email, website, telephone or any other means) and directly transferred to the
concerned unit/ department.
A copy of all complaints will be sent to the Group Compliance Division.
Reporting Mechanism
The Legal Compliance Unit / Department should ensure that its reporting mechanism is
comprehensive, accurate, consistent and actionable across business lines and products as per
the BDL Basic Circular number 128. A half-yearly periodic report must be submitted by the
Legal Compliance Unit / Department to the Senior Management, concerning the performed
assessment and follow-up missions, the corrective steps taken and the proposed
recommendations that limit occurring violations.
An immediate report will be submitted to the Senior Management and the Compliance Board
Committee on any important violation or breach of the laws and regulations in force.
10 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
The Legal Compliance Department must cooperate, coordinate, and exchange information
and reports of the identification of gaps in the banking and financial services, with all
directorate parties such as Group Internal Audit, Group Risk Management.
In parallel, the Legal Compliance Department must identify all aspects in the Compliance
Register Matrix which consists on identifying all banks functions and responsibilities by
regulator, circular, topic and function controller. The aim of this matrix is to emphasis the
risk of non-compliance by these functions and their penalties. The evaluation of the matrix
will lead the scope of work which consists of: tests methods, frequency of testing (monthly,
quarterly, semiannual, annual) and the corrective action plan along with the timeframe work
given.
The frequency of reporting reflects the legal risks involved and the nature of changes. The
results of monitoring activities should be included in the regular management and board
reports. All findings are classified and reported as per the below:
Impact and probability
Control owner
Risk rating
Test method
Last testing date
Test result
Corrective action
Next testing date
All high risk findings are reported immediately to the upper management. However,
the remaining findings are reported through the quarterly compliance board
committee and the semi-annual report.
In addition, the Group Compliance Division is responsible to oversee BLOM Bank Group, its
local and foreign branches and subsidiaries. Therefore, a reporting mechanism within the
group is well implemented as per the below.
Group Compliance Divion
Report directly to the General Manager
Half-Yearly Report to the Senior Management
Quarterly Report through the Board
Compliance Committee
Notify Immediately the Board of Directors about the high risk deficiencies
11 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
Each entity (local or abroad branch, subsidiaries or related entity), by its representative as
mentioned above (e.g. compliance officer, compliance representative, compliance manager
…) should submit a quarterly report to the Head of Group Compliance summarizing all Legal
Compliance and AML/CFT issues and concerns. This report should reflect any deficiencies
in the compliance program and breaches in the laws, regulations and internal administrative
instructions. Moreover, the report should refer to the whole compliance work program for the
current year and the correction action plan against the detected deficiencies. All reports
issued by those entities addressed either to the management, board of directors or the
competent authorities in addition to the reports issued by the internal / external audit and the
regulator should be attached along with the quarterly report. The Group Compliance Division
will submit these documents to the Compliance Board Committee on a quarterly basis.
3.2 Foreign Tax
BLOM Group in line with all major banking institutions worldwide, complies with the terms
and conditions of the Foreign Account Tax Compliance Act “FATCA” regarding tax evasion;
which was enacted in March 2010 as part of the Hiring Incentive to Restore Employment Act
(HIRE Act 2010) and with Standard for Automatic Exchange of Financial Information for
Tax Matter or Common reporting standards “CRS”.
3.3 Banking Relation
Due Diligence for Banks and Financial Institutions is recognized internationally, it is BLOM
Group responsibility to ensure that adequate controls and procedures are put in place for new
and existing banks relationships. In reference to BDL Basic Circular number 126, the Legal
Compliance Unit / Department must be fully informed of the laws and regulations governing
their correspondent banks abroad, and deal with the latter in conformity with the laws,
BLOM BANK S.A.L.
Head of Group Compliance
Domestic branches
Compliance Officers
Foreign Branches
Cyprus Branch
Compliance Officer
Iraq Branches
Compliance Representati
ve
Jordan Branches
Compliance Manager
Subsidiaries
BLOMINVEST BANK S.A.L.
Compliance Officer
BLOM ASSETS MANAGEMEN
T Co. S.A.L.
Compliance Officer
BLOM DEVELOPMENT
BANK S.A.L.
Compliance Officer
AROPE INSURANCE
S.A.L.
Compliance Officeer
AROPE LIFE INSURANCE - EGYPT S.A.E.
Compliance Officer
AROPE INSURANCE
OF PROPERTIES
& RESPONSIBI
LITIES - Egypt S.A.E.
Compliance Officer
BLOM BANK FRANCE S.A.
Compliance Manager
Romania Branches
Compliance Officer
London Branch
Compliance Officer
UAE Branches
Compliance Officer
BLOM BANK EGYPT S.A.E.
Compliance Manager
BLOM EGYPT SECURITIES
S.A.E.
Compliance Manager
BLOM BANK QATAR L.L.C.
Compliance Manager
BLOMINVEST SAUDI ARABIA
Compliance Manger
BLOM BANK (SWITZERLAND
) S.A.
Compliance Manger
12 Group Legal Compliance Policy| Group Compliance Division - BLOM Bank S.A.L.
regulations, procedures, sanctions and restrictions adopted by international legal
organizations or by the sovereign authorities in the correspondents’ home countries.
An annual due diligence review is performed in relation to cross-border correspondent
banking and other similar relationships.
Part of the Legal Compliance Unit / Department, is responsible for exchanging and disclosing
information requested by the Correspondent Banks’s Legal Compliance Department,
whenever a periodic compliance review is conducted or a transaction / client is under
investigation.
It is the responsibility of the Legal Compliance Unit / Department to ensure that the
respondent institution is fully compliant with local and international laws and regulations,
and if it adheres to international standards of banking practices. In this context, the Legal
Compliance Unit / Department gather all information about the respondent institution, to
check all publicly available information. All legal documents (Bank License, Articles of
Association, Certificate of Incorporation, Suitable IRS Forms etc.); are reviewed from a legal
perspective, all documentary verification must show the legal existence of the entity. All
information related to sanctions compliance programs (including a summary of due diligence
policies, procedures and controls) of the entity are also reviewed. In addition, a reputational
review is conducted to the extent reasonable, reviewing publicly available information to
determine whether the Foreign Bank has been the subject of a money laundering or other
criminal investigation, criminal indictment or conviction, any civil enforcement action based
on violations of international laws or regulations or any investigation, indictment, conviction
or civil enforcement action relating to financing of terrorists. The Legal Compliance Unit /
Department will inquire into the local market reputation of the bank by media reports or by
other means.
The Legal Compliance Unit / Department will obtain approval from the Senior Management
before establishing new correspondent relationships.
3.4 Compliance Control
The Legal Compliance Unit / Department performs the adequate tests to verify compliance
with the policies set by the bank and laws or regulations issued by the competent authority
(the Central Bank, Banking Control Commission, Capital Markets Authority etc…) by
conducting regular onsite visits to the Bank’s entities (departments, branches, subsidiaries
etc.). The Legal Compliance Unit / Department scope of work will be defined by the legal
compliance register/compliance function in addition to other compliance issues.
The Legal Compliance Unit / Department must verify that the required corrective measures
are applied upon the detection of any violation resulting from non-compliance specially the
identification of non-compliance risks associated to the activities of the bank.