Banks Obliged to Establish Risk Department

The Central Bank of Iran has urged banks to set up a compliance risk department in line with Basel II Accord issued by the Basel Committee on Banking Supervision in June 2004, said the CEO of Bank Sepah. “According to Basel II, banks need to identify, control and terminate the risks caused by the flouting of regulations, standards and internal or international agreements in addition to common risks,” Mohammad Kazem Choghazardi was also quoted as saying by ILNA. Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. The compliance department will function like a bank’s internal police force that ensures the financial institution complies with applicable laws and regulations, and helps preserve the integrity and reputation of the bank.