ING Direct 2011 Annual Report Download - page 248

Risk management continued
ING Bank
supervisory role over all functional activities of the Compliance Officers in the respective region or Universal Bank. The CCO and the
BankCompliance Risk Management team provide overall direction to the Regional or Universal Bank Compliance Officers.
To avoid potential conflicts of interest, it is imperative that the Compliance Officers are impartial and objective when advising business
management on Compliance Risk in their business unit, region, country or entity. To facilitate this, a strong functional reporting line to the next
higher level Compliance Officer is in place. The functional reporting line has clear accountabilities relating to objective setting, remuneration,
performance management and the appointment of new Compliance Risk Management staff as well as obligations to veto and escalate.
Scope
The Compliance Risk Management function focuses on managing the risks arising from laws, regulations and standards which are specific
to the financial services industry. The Compliance Risk Management function actively educates and supports the business in managing
compliance risks including anti-money laundering, preventing terrorist financing, conflicts of interest, proper sales and trading conduct
andprotection of customer interest.
ING Bank separates Compliance Risk into four conduct-related integrity risk areas: client conduct, personal conduct, organisational conduct
as well as financial conduct. ING Bank has a Whistleblower procedure which encourages staff to speak up if they know of or suspect a
breach of external regulations or internal policies or Business Principles.
Compliance Risk Management Framework
The Framework consists of three key components:
1. The Compliance Risk Management process
The process has five key activities carried out in accordance with the requirements of the Framework:
A. Identification of Compliance Risk Obligations;
B. Risk Assessment;
C. Compliance Risk Mitigation (includes Training and Education);
D. Compliance Risk Monitoring (includes Action Tracking); and
E. Compliance Risk Reporting (includes Internal Events Reporting and Response).
2. Advisory
Compliance Officers proactively advise their CEO, Management, local boards and committees, the next higher level Compliance Officer,
and employees on Compliance Risk, responsibilities, obligations and concerns.
3. Scorecard
The Compliance Risk Management function works with the Operational Risk Management Scorecard process to evaluate how well the
Compliance Risk Management Framework is embedded in each business. Scoring is based on the ability of the business unit to
demonstrate that the required policies and procedures are implemented.
Extra-territorial regulations
Financial institutions continue to be closely scrutinised by regulatory authorities, governmental bodies, shareholders, rating agencies,
customers and others to ensure they comply with the relevant laws, regulations, standards and expectations. Bank regulators and other
supervisory authorities in Europe, the US and elsewhere continue to oversee the activities of financial institutions to ensure that they
operate with integrity and conduct business in an efficient, orderly and transparent manner. ING Bank seeks to meet the standards and
expectations of regulatory authorities and other interested parties through a number of initiatives and activities, including scrutinizing
account holder information, payment processing and other transactions to support compliance with regulations governing money
laundering, economic and trade sanctions, bribery and other corrupt practices. The failure or alleged failure by ING Bank to meet
applicable standards in these areas could result in, among other things, suspension or revocation of ING Bank’s licenses, cease and desist
orders, fines, civil or criminal penalties and other disciplinary action which could materially damage ING Bank’s reputation and financial
condition, and accordingly ING Bank’s primary focus is to support good business practice through its Business Principles and policies.
ING’s continued actions to mature its compliance risk management programme will ensure that ING continues to comply appropriately
with international standards and laws. ING has an on-going objective to continuously strengthen the Financial Economic Crime (FEC)
controls related to:
• managing Anti-Money Laundering (AML);
• Combat Terrorist Financing (CTF); and
• Export Trade and Sanction risks.
As a result of our frequent evaluation of all businesses from economic, strategic and risk perspectives ING Bank continues to believe that
for business reasons doing business involving certain specified countries should be discontinued, which includes that ING Bank has a policy
not to enter into new relationships with clients from these countries and processes remain in place to discontinue existing relationships
involving these countries. At present these countries include Myanmar, North Korea, Sudan, Syria, Iran and Cuba. Each of these countries is
246 ING Group Annual Report 2011