PURPOSE The purpose of BLOM Bank s Board Compliance Committee is to oversee the compliance risk profile, approve and monitor the compliance framework of BLOM Bank and its controlled entities within the context of the compliance strategy determined by the Board of Directors. It is nominated by the Board to oversee on its behalf the integration of Compliance in the Bank. It shall promote effective management of AML/CFT Risk, Legal Compliance Risk, and foster the establishment and maintenance of an effective compliance culture throughout the Bank. MEMBERSHIP The Board of Directors appoints the Chairman and members of the Committee for its entire mandate and shall reconsider its composition and remit when necessary. The members of the Committee shall be elected from among the Board members and the Bank s management. The Committee shall remain in office until the appointment of a new Board of Directors. The Committee should comprise a minimum of three members of which the Chairman should be independent director of the Board of Directors and cannot simultaneously serve as member of the Board Audit Committee, the Board Risk Management Committee and the Board Nomination and Remuneration Committee. Other members could be executive Directors of the Board. When electing the members of the Committee, education, professional skills, experience in matters relating to the activities of the Committee, ability to work with financial documentation, as well as other specialized knowledge required for Committee members to exercise their authority, should be taken into account. New members should be provided with a copy of the Committee s Charter and other relevant information about the Bank. The committee s membership may be ceased for all or some members following a Board resolution. In such case the Board of Directors shall elect a new Committee member or reduce the composition of the Committee. A member of the Committee may also choose to cease his/her membership, effective when sending a written note to the Chairman of the Board and the Chairman or Secretary of the Committee unless the notice specifies a later time for the effectiveness of the resignation. During the following meeting, the Board shall elect a new Committee member. Till that date, the Committee member shall carry out all his/her responsibilities in full. Board Compliance Committee Charter, September 2016 Page 1 of 7
MEETINGS AND QUORUM The Committee shall meet as often as it determines, but not less than quarterly, where two meetings at least shall be held in Lebanon. The Committee shall maintain records of its meetings including attendance. The notification of the Committee s members and invitees on the date and place of the meeting shall be made by the Committee s Secretary not later than one week before the meeting. The necessary materials on items included in the agenda shall be in general provided to the committee s members not later than one week before the meeting, and before 48 hours in exceptional cases, although such material as well as items may be presented at the meeting if a member deems it to be a matter requiring the Committee s attention. The Chairman of the Committee may promptly invite members to meet in urgent cases. A minimum of three members of the Committee shall constitute a quorum for the transaction of any business at any meeting of the Committee. Meetings should not be held if the Chairman of the Committee is not present except in exceptional cases whereby such meeting would be chaired by an independent member. In addition to Committee members, persons who assist in the preparation of material related to the upcoming Committee meeting may be invited to attend Committee meetings. These persons may participate in discussions and make proposals on agenda items but do not have the right to vote on Committee meeting agenda items. The quorum is determined by the Committee s Secretary at the beginning of the meeting and recorded in the minutes. If there is no quorum, the meeting is rescheduled with the same agenda. The Committee s resolutions shall be taken as a result of an open voting process. Each of the Committee s members as well as the Chairman has one vote. The voting power could not be delegated to any other Committee s member or the Chairman. In the event that Committee members votes are evenly split, the Chairman of the Committee shall have the deciding vote. If a quorum is present when a vote is taken, then the vote of the majority of Committee members present shall constitute the act of the Committee. The Committee shall record in its minutes its agreement or disagreement with any Compliance related policy, procedure or report that the Committee reviewed. The Committee s Chairman shall report to the Board of Directors about all matters discussed and approved within the Committee. Board Compliance Committee Charter, September 2016 Page 2 of 7
AUTHORITIES, DUTIES AND RESPONSIBILITIES The Committee shall perform the following duties: In terms of AML/CFT: - Assess the procedures guide on the implementation of the AML/CFT Law and the present regulations. - Assess the form of customer s identification (KYC Know Your Client) that includes basic information to be provided about customers. - Assess and verify the proper implementation and effectiveness of AML/CFT procedures and regulations. - Assess and review the procedures and regulations in order to develop them in line with the latest adopted methods. - Assess and review the staff training program concerning the methods of controlling financial and banking operations in order to fight money laundering and terrorist financing. - Ascertain that concerned employees are complying with the procedures guide on the implementation of AML/CFT legal and regulatory texts, and that the KYC Forms are filled. - Assess and review the cash declaration exemption procedures, and also to review the exemption ceiling and assess it according to developments in the customer s economic situation. - Assess and review the reports received from the concerned departments and branches about suspicious activities. - Assess and review the investigation results of suspicious transactions and activities. - Assess and review the opening and holding risky individuals and entities accounts. - Assess and review the investigation results of fraud cases, including fraudulent bankruptcy. - Assess and review the effectiveness of the policies and procedures related to international sanctions. - Assess the communications with the Financial Intelligence Unit (FIU). Board Compliance Committee Charter, September 2016 Page 3 of 7
In terms of Legal Compliance: - Assess and review the Group implementation of compliance procedures needed to verify compliance with the laws, regulations, procedures and directives issued by Central Banks, Regulatory Bodies, Capital Market Authorities and Financial Intelligence Unit and any other relevant body. - Review the adequacy of the procedures adopted by the Bank to detect any violation or breach. - Assess the results of adequate tests performed to verify compliance by the Bank employees with the policies set by the Bank. - Oversight and review of the implementation of compliance function and propose corrective measures that limit occurring violations. - Identify and assess non-compliance risks associated with the activities of the Group. - Direct the development and /or Implementation of compliance related policies and procedures. - Ensure that the required corrective measures are applied upon the detection of any violation resulting from non-compliance. - Ensure that compliance procedures, systems and controls are being evaluated. - Review and assess compliance issues that require follow-up or investigation. - Review and assess customer complaints to oversee the resolution that relates to compliance with any laws or regulations. - Review and assess compliance visit reports conducted to BLOM Group entities. - Assess the relationship with the Correspondent Banks. - Review and assess the effectiveness of the policies and procedures related to international tax regulations (FATCA, CRS ) Board Compliance Committee Charter, September 2016 Page 4 of 7
General terms: - Propose administrative instructions and circulars regarding regulatory changes to be implemented internally. - Review the sufficiency of personnel, systems, procedures and other compliance issues. - Conduct an annual review of the Committee s performance and the adequacy of its Charter, and approve any changes. If no changes are suggested by Committee members, the Charter shall be deemed as being automatically renewed. - Evaluate the Committee s performance at least once a year. The Committee retains the right to: - Request and receive documents necessary for performing the Committee s duties from the Bank s executive bodies. The Committee shall request these documents via a request signed by the Committee s Secretary. The requested documents shall be submitted to the Committee s Secretary by the deadline indicted in the request. - Invite to the Committee s meetings Bank executives, members of the Board and independent experts if deemed necessary and appropriate. - Appoint subcommittees or bank employees with the required professional skills to work with the Committee or to whom the Committee can delegate all or portion of its duties. The members of the Committee shall: - Participate fully and thoroughly in the work of the Committee. - Attend all Committee meetings and be active in the discussion of agenda items. - Study all documents provided for the meeting. - Inform the Committee of any conflict of interest in any debated matter. - Avoid any action that might compromise the fulfillment of the Committee s mandate or question its members professional integrity. Board Compliance Committee Charter, September 2016 Page 5 of 7
THE COMMITTEE S CHAIRMAN The Committee Chairman is appointed by the Board of Directors and must be an independent member of the Board with knowledge of and experience in the financial sector. The Committee Chairman shall organize the work of the Committee, including: - Calling Committee meetings (this may be done through the Committee s Secretary) and preside over them, organizing discussions and agenda items at the meetings. - Presenting resolutions/decisions or recommendation of the Committee to the full Board of Directors. - Representing the Committee in relations with Bank s management bodies, the Board of Directors and the Committee under the Board of Directors in an effort to receive complete and reliable information necessary to the decision making process within the Committee and draw up recommendations to be submitted to the Board of Directors. The Committee s Chairman may not assign his authorities to another person. In the absence of the Chairman, the members of the Committee may appoint from among themselves an independent member to preside over the meetings. THE COMMITTEE S SECRETARY BLOM s Head of Group Compliance Division shall be the Committee s Secretary. The Committee Secretary, in conjunction with the Chairman, shall draw up an agenda for meetings, which shall be circulated to each member of the Committee and attendees, at least one week prior to each meeting, and before 48 hours in exceptional cases. He/She shall bear responsibility for the filling and storing of the meeting s minutes. The Committee Secretary shall work in collaboration with the Bank s administration and management to provide organizational and technical preparations for Committee meetings including arranging a venue, required documents, collect and systemize material for the meeting, compile a list of the proposed agenda items, send Committee members and all invited parties timely notification of upcoming meetings, the agenda and its related documents, prepare drafts of Committee decisions and rulings and provide for the subsequent filing and storage of all corresponding documents. The Committee Secretary shall prepare the Minutes of the Committee meetings. He/She determines the quorum at the beginning of the meeting and records in the minutes. Board Compliance Committee Charter, September 2016 Page 6 of 7
MINUTES OF MEETING The minutes of the Committee meeting shall be recorded by the Committee Secretary, and in the event of his absence, the minutes shall be recorded by a member authorized by the Chairman of that meeting, or, if approved by the Chairman of the Committee, by the Deputy Head of the Group Compliance Division. Minutes shall be in written form and signed by the Chairman, all present members and the Secretary of the Committee or any other individual acting in their place at the meeting. Meeting minutes shall indicate: - The date and time of the Committee meeting, - Attendees - Agenda items - Voting results and adopted resolutions The minutes shall be available for review by any regulatory authority having jurisdiction over the affairs of the Bank. ************************* END OF CHARTER ************************* Board Compliance Committee Charter, September 2016 Page 7 of 7