compliance management system. This review includes reports that identify
any weaknesses or required modifications due to changes in laws, regula-
tions, or policy statements. Prompt and capable management response to
those weaknesses and required changes is the final measure of the compli-
ance system’s effectiveness. The bank’s senior management is required to
assign a well-qualified staff and the necessary resources to properly imple-
ment and administer the compliance program. Participation in the compli-
ance management system at all levels is important to its success.
Compliance Program
Each bank is expected to aspire to have in place a carefully devised, imple-
mented, and monitored program that will provide a solid foundation for
compliance. The bank’s management will continually evaluate its organiza-
tion and structure and modify its existing program to ensure that the com-
pliance program meets its specific emerging new needs.
Acompliance committeeis appointed by the board and is headed by a
chief compliance officer, who has specific responsibilities and authorities.
Compliance Committee
The board is required to organize the committee, which is chaired by the
chief compliance officer. A typical committee in a small community bank
would include the following members:
&Chief credit officer (deputy committee chairman)
&Chief operations and private banking manager (deputy committee
chairman)
&Chief financial officer (deputy committee chairman)
&Manager of loan administration and credit analysis
&Technology coordinatorThe bank compliance committee may have the following subgroups,
which will focus on specific compliance activities:
&New Accounts, Customer Service, and Information Security and Tech-
nology Compliance
&Credit Operations Compliance
&Financial and Accounting Operations ComplianceThe committee is expected to meet periodically (e.g., quarterly) or on
an as-needed basis.
The Conventional Riba-Based Banking System 165