Bank focuses more on compliance risk control

An outlet of Bank of China in Zhoukou, Henan province. [Photo provided to China Daily]

Bank of China said on Monday it is placing greater focus on and devoting more resources to manage compliance risks and meet anti-money laundering rules in other countries, as it expands globally to serve Chinese companies and local clients.

Bank of China's initiative follows similar moves made by the other big mainland commercial banks.

The country's fourth biggest commercial lender, with the widest overseas network among its domestic peers, said it had set up a risk policy committee under its board of directors－in addition to a committee of risk management and internal control and an anti-money laundering committee under the management team.

"We've been following the latest regulatory requirements closely and strengthen our supervision of compliance risks during the process of cross-border product development and overseas expansion," the banks said in a written email reply to China Daily.

"In the meantime, we have developed our own operational risk monitoring and analysis platform and anti-money laundering system to prevent and control regulatory violations," the bank added.

"We used big data analytics to summarize the risk features of violations and transform the information into a control model implanted into the system, which will analyze bank accounts and transactions and monitor our business remotely."

With the implementation of the bank's three-year plan for anti-money laundering for the 2015-17 period, Bank of China said it has now hired full-time compliance officers at every overseas branch and subbranch and had a compliance department at key branches worldwide.

Apart from offering anti-money laundering training to all employees at the grassroots level during the three years, it has carried out due diligence and money laundering risk assessments on its clients both in and outside China.

The bank said it would keep strengthening compliance management. It said it would do this by creating positions for regional compliance officers, building professional teams, improving its compliance culture, stepping up previews of compliance risk and establishing a mechanism for compliance assessment before the launch of a new overseas branch.

The bank is not alone in stepping up the efforts to meet compliance requirements internationally. Agricultural Bank of China Ltd, another large State-owned commercial bank, will also strengthen compliance risk controls by building a globally-integrated comprehensive risk management system and improve its ability to manage overseas branches, bank chairman Zhou Mubing, told a meeting on its overseas business in 2017 on Jan 20.

The meeting was held a few days before the China Banking Regulatory Commission issued a guideline on Jan 25 for banks to tighten risk controls and standardize their services for Chinese companies that expand business internationally.

Highlighting the significance of compliance risk management, the CBRC required banks to reinforce the construction of compliance systems, intensify everyday compliance management and efforts against money laundering and the financing of terrorism, allocate more resources to compliance and improve their efficiency of communications with local regulators.

According to the CBRC to date, Chinese banks have set up more than 200 tier-1 overseas branches and nine banks have launched 62 tier-1 branches in 26 countries along the routes of the Belt and Road Initiative, which aims to promote connectivity among Asian, European and African countries.