Arab Banks urge risk management

“Banks must adopt strong governance, accurate information technology systems, strong capitalization, in addition to employing highly skilled human resources in a bid to help in their fight against money laundering and terrorism financing,” he said.

“Any failure to do so will threaten banks’ existence in the market.”

Hammoud’s remarks came during the seventh Annual Risk Management in the Arab Banks Forum, organized by the Union of Arab Banks at the Coral Beach hotel Thursday. The forum aims to discuss current priorities of risk management for Arab banks in addition to providing a platform for professional dialogue among risk practitioners.

Hammoud said Lebanon is committed to proper banking regulations that Lebanese banks are highly aware of compliance risks.

“We are sure that the flexibility that characterizes Lebanese banks will enable them to overcome this current challenging period,” he said.

“However, we wish upon banks to give more attention to training their resources in addition to upgrading the performance of their administrative staff, starting with members of the board of directors.”

Hammoud noted that over the past 40 years, Lebanon has been faced with several challenges due to political and security instability that has weighed heavily on its economy, while at the same time immunizing the country against unusual shocks and risks. In a bid to strengthen banks in the face of these risks, the central bank issued circulars covering various areas, he added.

For his part, Mohamed al-Jarrah al-Sabbah, president of the Union of Arab Banks, said Arab banks are keen to implement international regulations such as BASEL, FATF and FSB due to their great awareness of compliance risks in their countries and in foreign countries.

Sabbah emphasized the importance of adopting proper governance in banks that facilitate the duties of regulatory authorities.

He also noted that it is very important for banks to coordinate and cooperate with judicial, security and regulatory authorities in order for them to be able to have access to as much information as possible about their clients and avoid de-risking.

De-risking refers to banks’ moves to close the accounts of clients considered to be highly risky.

“It is very important for banks to cooperate with regulatory authorizes and obtain the necessary information about their clients,” Sabbah said. “This will enable banks to keep their clients while avoiding the de-risking phenomenon which leads to the rise of shadow banking,” he added.

The Daily Star

May 19, 2017