CCC terms of reference. The Central Compliance Committee or CCC follows the terms of reference (TORs) established by the CEO and the Board of Directors. The TORs are created using the regulator’s AML/KYC regulatory criteria as well as other relevant regulatory compliance needs.

CCC Terms Of Reference

The CCC’s TORs contain the following major functions and responsibilities, which members of the CCC must fulfil and adhere to: 

a) monitor entity-wide compliance risks and ensure that management is aware of the compliance risks to which the company is subject; 

b) promote a high compliance culture and help the compliance function in fulfilling its compliance responsibilities;

c) assist and facilitate the compliance team in implementing policies, processes, and procedures to manage compliance risk, and establish a mechanism to ensure that the desired regulatory compliance results are achieved as envisaged in the compliance programme; 

d) assist and facilitate the compliance team in implementing policies, processes, and procedures to manage compliance risk; 

e) report on the effectiveness of compliance controls to the Board Compliance Committee (BCC).

Compliance Function

The Compliance Function is the department in charge of compliance, which is led by the Chief Compliance Officer or CCO and overseen by the CCC. The CCC makes certain that the CCO has adequate resources and a compliance team, including the Anti-Money Laundering (AML) team. 

The major goal and obligation of the CCC is to ensure that the Compliance Program, including the AML and KYC standards, is implemented correctly. CCC creates a Compliance Function that is separate from the business lines and activities for this reason. The CCO is responsible for ensuring that compliance operations are carried out properly. CCC must guarantee that the compliance function is not placed in a position of real or apparent conflict in terms of scope, reporting, or compensation.

CCC ensures that the compliance team must have a clear authority and unrestricted access to the information and personnel necessary to carry out their compliance-related roles and responsibilities. A constructive and cooperative working relationship between the compliance team and other departments is required to be implemented, by CCC, to facilitate the overall identification and management of compliance risk within and across different departments.

Financial Institution

In the Financial Institution, CCC ensures that the Compliance Function comprises different sub-departments, such as the AML department, Regulatory Compliance department, and Compliance Monitoring Department. Each Compliance department reports to the CCO and works as per the defined compliance agenda. For example, the AML department is primarily responsible for monitoring the customers’ accounts and transactions to identify any possible incident of money laundering. 

Similarly, the Regulatory Compliance department is responsible for communicating with all the organization’s departments and sharing with them their respective regulatory requirements for compliance purposes. Regulatory compliance departments also provide regulatory advice to the departments and employees to help them understand the key compliance requirements expected from them.  

All the Compliance departments provide regular updates and reports to the CCO to enable him to assess the overall compliance position of the organization. 

Final Thoughts

A Terms of Reference (TOR) document establishes a specific board or committee and specifies the authority that board or committee has to oversee a delegated area of responsibility. In accordance with any specific legislative requirements, it should clearly define the roles, responsibilities, operations, tenure, and obligations. The benefit of developing a TOR is that it provides board or committee members and key stakeholders with a shared understanding of the board’s or committee’s scope, objectives, and operational processes, as well as any legislative requirements.