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CBN Insists on Compliance Framework in Banks

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The Central Bank of Nigeria (CBN) has urged the 24 banks to develop strong compliance frameworks that will promote adherence to various rules and procedures, in a bid to ensure the safety and soundness of the banking system.

The Deputy Governor, Financial System Stability, Dr. Kinsley Moghalu, said in Lagos yesterday that the adoption of a strong compliance framework by banks will ensure that most of the factors that plunged the industry to crisis will be avoided. 

Moghalu, in a keynote address delivered on his behalf by Director, Regulation, Mr. Christopher Chukwu, at the international symposium for Nigerian banks organised by the Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN), pointed out that the weaknesses in the compliance framework of banks were greatly pronounced in weak governance structure that contributed largely to the distress suffered by some banks.The chairman of CCCOBIN, Mr. Abubarka Bello, said the symposium was organised to help Nigerian banks protect themselves against the failures of the past years that had devastating consequences on the industry.

“The review of the corporate governance structure of most banks shows that the inability of the boards of directors to effectively oversee the activities of management was one of the causes of the crisis. Indeed that belief has been confirmed by audits of the operations of Nigerian banks under the on-going banking sector reform. The audit reviews show that the failure of corporate governance, particularly the failure of the boards of directors to moderate management’s risk appetite,” he said. Moghalu commended CCCOBIN on the theme of the symposium: ‘The Three Lines of Defence.’ He said the concept represents a strategic governance model and an approach to safeguarding the internal control framework of businesses, including financial institutions.

“The choice of the theme for this symposium is timely and suitable particularly in the aftermath of the global financial crisis that adversely altered most markets around the world. The banking reform program of the CBN was designed to contain the crisis. The three lines of defense in an effective control environment deploying the dynamics of modern corporate structure would seek to focus on accountable executive management and board oversight committees, he added.

(Source:ThisDay)