The Role of the Compliance Officer in Auditing Compliance to Meet the Requirements of the Central Bank of Iraq

Abstract

The Central Bank of Iraq is one of the supervisory bodies over private banks, as it seeks to preserve the banking system through a set of tools, the most prominent of which is the creation of the position of Compliance Controller, which is part of compliance controls, and mandated banks to appoint personnel to monitor  the implementation of its circulars based on its letter No. 9-3-346, dated 20-8-2019 “Sharia Compliance Report and Compliance Monitoring”, which takes it upon itself to follow up on the bank’s commitment to the instructions and decisions issued by the Central Bank and the Board of Directors, in addition to providing advice and consultation in order to correct violations, if any, to avoid being exposed to financial and administrative penalties. The study sought to demonstrate the impact of this function and the procedures it undertakes, which could affect a bank's exposure to penalties for non-compliance with requirements. An inspection form was used to verify compliance with the requirements specified by the Central Bank of Iraq. At the end of the study, the research reached a set of conclusions, the most prominent of which is that the compliance officer in banks, as one of the bank’s departments within its organizational structure, has specific justifications. These include contributing to avoiding legal penalties on the bank and preventing financial losses and risks to the bank’s reputation. Banks face many and diverse risks due to their business and activities. Among these risks, which have notably increased in recent years, are legal penalty risks, reputational risks, and economic loss risks. These three risks are referred to as compliance risks.