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COMPLIANCE ISSUES & COMPLIANCE RISK
What is compliance risk in the context of banking?
Compliance risk is the risk of legal or regulatory sanctions, material financial loss, or loss to reputation that a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its banking activities.
What is the primary objective of a bank's compliance function?
Ensure adherence to laws, regulations, and internal policies.
Which RBI circular established the framework for compliance functions in Indian banks?
RBI's Guidelines on Compliance Function in Banks (2007) established the framework, requiring banks to have a dedicated Compliance Department headed by a Chief Compliance Officer (CCO) who reports directly to the MD & CEO or the Board.
What is a 'compliance universe' in bank risk management?
Complete inventory of all applicable laws and regulations for a bank.
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