Identifying the volatility of compliance risks for the pension custodian banks
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Author(s)Svіtlana AchkasovaLink to ORCID Index: https://orcid.org/0000-0001-7233-0189
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Olena BezrodnaLink to ORCID Index: http://orcid.org/0000-0002-9480-0898
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Yevheniia OhorodniaLink to ORCID Index: https://orcid.org/0000-0002-2031-6278
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DOIhttp://dx.doi.org/10.21511/bbs.16(3).2021.11
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Article InfoVolume 16 2021 , Issue #3, pp. 113-129
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188 Downloads
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Creative Commons Attribution 4.0 International License
The high probability of risk transfer from banks to their counterparties in the field of non-state pension provision (pension account owners, non-state pension funds, insurance companies, asset management companies, etc.) determines the relevance of this study. The paper aims to develop a toolkit for identifying the compliance risk volatility for pension custodian banks based on causal modeling.
This toolkit contributes to: 1) tentative cognitive mapping of the causal relationship between the compliance risks of pension custodian banks in the field of financial monitoring and financial and reputational risks to assess their acceptability by stakeholders in non-state pension programs, and 2) impulse modeling.
The created toolkit is based on the performance data provided by Ukrainian banks, as well as on the reports of the National Bank of Ukraine. Apparently, an increase in penalty rates by 0.1% would reduce the compliance risks for banks by 0.03%, and the number of violations in financial monitoring (specifically the improper assessment/reassessment of customer risks) by 0.01%. In turn, the compliance risk volatility inherent in custodian banks affects the variability of their reputational and financial risks. Thus, reducing the compliance risks by 0.1% would improve the reputation of banks and increase their regulatory capital by 0.01%.
The study findings substantiate the use of the created toolkit to supplement the risk profile components for pension custodian banks, thereby demonstrating the potential volatility of their compliance risks and their consequences for banks and individual groups of their stakeholders.
Acknowledgment
The work is prepared and financed within the framework of the state budget research work No. 45/20202021 “Formation of a risk-oriented system of accumulative pension provision” (DR No. 0120U101508).
- Keywords
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JEL Classification (Paper profile tab)C15, G21, G23
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References63
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Tables3
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Figures4
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- Figure 1. Forecasted variability of compliance indicators and expectations of the bank’s counterparties in the field of non-state pension in response to the change in the amount of penalties
- Figure 2. Forecasted variability of compliance indicators and expectations of bank’s counterparties in the non-state pension sphere affected by changes in the intrabank compliance system
- Figure 3. Forecasted variability of compliance indicators and the bank’s counterparties’ expectations in the non-state pension sphere affected by the changes in capitalization
- Figure A1. Cognitive map of acceptance criterion variability applicable to banks acting as pension custodians in light of the counterparties’ expectations for non-state pension provision, taking into account the impact factors (violations and measures of
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- Table 1. Analytical background for modeling banks’ compliance risks (pension custodians) in the field of financial monitoring and their consequences
- Table 2. Formalization of compliance criteria for banks acting as pension custodians, financial monitoring measures, the extent of banks’ internal compliance and NBU regulations
- Table B1. Matrix of mutual impact on the acceptance criteria applied to banks acting as pension custodians due to the NBU’s measures and violations committed by banks in the field of financial monitoring, as well as potential actualization of network sche
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Financial monitoring of the port industry companies on the basis of risk-oriented approach
Investment Management and Financial Innovations Volume 14, 2017 Issue #1 (cont.) pp. 191-199 Views: 1558 Downloads: 404 TO CITE АНОТАЦІЯThe paper determines that the need in financial monitoring of Ukrainian companies of the port sector is caused by financial consequences related to the need to protect the environment, the existence of a dominant part of payments in foreign currency (foreign exchange risk associated with currency fluctuations), the possibility of cash outflows into the shadow sector of the economy and the possibility to use transport for smuggling. In addition, in the recent years there is a tendency of diminished financial stability of the seaports of Ukraine, which is a signal to determine the factors that have an impact on this situation, the consequences of risky operations and the optimal structure of sources for the formation of assets. An important aspect of financial monitoring is the necessity to identify the data about the objecton the basis of insignificant and relevant information, which makes it possible to avoid non-essential features and parameters and to speed up the decision making process at the lowest cost of expenditures and time. The study offers a methodical approach to financial monitoring of the port industry companies on the basis of the risk-based approach that takes into account the conditions for the functioning of port companies and their business characteristics, making it possible to implement the appropriate measures to prevent and avoid risky financial transactions and, consequently, to increase/preserve the competitiveness of the port sector companies. Regarding the need in further studies of the practical realization of financial monitoring of the port sector companies, there is a choice and substantiation of aggregate indicators of the financial monitoring system, their listing with a view to specific features, types and scale of activities.
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Implementation of state financial monitoring based on risk-oriented indicators in the activities of financial institutions
Zhanna Andriichenko
doi: http://dx.doi.org/10.21511/dm.18(3).2020.05
The article examines the systems of risks of various types of financial institutions and focuses on the absence of the risk of legalization among them. This risk is considered separately within the framework of a special system of relations in the field of combating money laundering, financing of terrorism and financing the proliferation of weapons of mass destruction. The evolution of criteria for assessing the risk of a financial institution to be involved in legalization is analyzed, risk-oriented indicators of the activities of financial institutions used to assess their risk profile are generalized. It is established that one of the regulators in the financial services market, the National Securities and Stock Market Commission, uses outdated, formal, and ineffective criteria for assessing the risks of a financial institution to be involved in money laundering. However, the other regulator, the NBU, has already carried out the process of adapting state financial monitoring to the requirements of FATF and AMLD4 and developed risk-oriented indicators of financial institutions’ activities, used to assess their risk profile. Strengthening the control by the subjects of state financial monitoring over the risk profile of a financial institution and its overall financial monitoring system will help to increase the efficiency of state financial monitoring. It is proposed to unify risk-oriented features and introduce identical financial monitoring mechanisms for all participants in the financial services markets, considering the specifics of their activities, as well as including the risk of legalization in the risk system of a financial institution in order to improve the efficiency of the financial monitoring system.
