Classification of banks for the purpose of entering the sale of foreign currency window

Classification of banks for the purpose of entering the sale of foreign currency window

 

6/12/2017 0:00

Ali Mohsen Ismail / Governor of the Central Bank of Iraq
since the beginning of this year , the Central Bank of Iraq began to adopt specific weighting criteria concerning the participation of banks in the sale of foreign currency window ( the dollar), and comes after nearly a year of preparation and consultation for the development of such standards as currently drafted, it was given these standards constitute a certain relative degree of aggregate final grade of the bank, which in turn determines its share of the quantity sold foreign currency daily.
According to the new system is the central bank has put the sale of the dollar in the framework responds to legal, regulatory and local and international regulatory requirements, and adopts the principles of disclosure, transparency and reliability, including the financial system rise to the level of international practice.
What are the reasons of this category and what are the approved criteria and mechanisms identified?
I have been adopted this classification in order to achieve a set of legal and economic goals stand in front of them:

1 - the international financial system , the requirements of a
high risk of money laundering and the financing of terrorism has led to the attention of international organizations by establishing rules and local and international action to address the risks of those operations for the financial system and community protection, it constitutes compliance with those rules and procedures by States and institutions basically essential in relationships and financial channels international, which states that financial institutions from banks or other foreign relations have become financial and operations are subject to compliance with the degree and application of the rules of international conventions in this regard, and it came to the exclusion of entities, but states, Placed in the ban box because of weak regulations and procedures and their environment, as it is called (Derisking). As the international financial institutions to cut off the ports of entry to the international financial system in front of local companies and banks due to risks related to financial crimes rise.
On the other hand, and that Iraq is dealing mainly in the currency of the dollar (due to the fact that pegged the dinar to the dollar), and the country 's foreign transactions are done, this makes Iraq subject to the procedures and rules of trading and the movement of the US dollar set by the US Federal Bank and the US Treasury , which aims to control the movement of the dollar investigated to curb money laundering and terrorist financing, thus resulting states (including Iraq) to design the rules and procedures necessary to monitor the movement of the dollar and to identify the paths used systems and move from one place to another.
The actions taken by the central bank in the application of the rules and principles of anti - money laundering and the financing of terrorism , which resulted in removing Iraq from the gray area within the classification and evaluation of the Financial Action Organization (FATF) internationally concerned with this subject, and Iraq was under threat thereof in the international exclusion zone, which means the closure of the system ports international financial against Iraq.
Requiring banks to apply the rules of compliance and the Central Bank has established programs and instructions systems as well as linking dollar selling process to abide by them, with effective control of all this, international organizations gave positive messages which resulted in the reclassification of Iraq and remove it from the risk of financial embargo. 2 - the requirements of the application of the Anti - Money Laundering and the Financing of Terrorism Act to  impose law against money laundering and terrorist financing obligations on financial institutions which take care of procedures to customers starting from the customer identification and the real beneficiary and the procedures for opening accounts, documents, transfers .... etc., and to develop policies and procedures precise controls comply with the obligations imposed in the area of control. The law mandated the central bank also as the regulatory and supervisory authority over financial institutions, as well as the development of inspection tasks and means of procedures and standards follow the instructions of the commitment of financial institutions to combat money laundering and the financing of terrorism. Noting that the sale and purchase of the dollar taking place in financial institutions operations (banks) are based, which involve significant operations in terms of overall size, they require monitoring the application of the rules of compliance when banks committed to the rules of control according to the law in terms of verification of the sources of funds ( the dinar), including the application the principle of (know Your Customer), and in terms of the verification of the final uses and intermediate so as to check the integrity and nature of such operations, has been assigned the law to the Governor of the Central Bank put the necessary instructions for due diligence by financial institutions, it is natural that the central bank monitors the extent of compliance with those rules The instructions and put it basically a standard in narrowing and expanding the entry of banks into buying and selling foreign currency operations. The essence of the classification is based on the extent of banks compliance with anti - money - laundering and the financing of terrorism, under the standard (Compliance) , which includes a number of criteria associated with banks and procedures for those rules from all aspects. 3 - Requirements improve the performance of banks and the standards that have been developed represent an important incentive to improve the performance of banks, as pushing for the reorganization of the banking business in regulatory and legal regulatory framework staves about the risks and live up staff level, as the central bank committed banks by developing units or departments can contribute in it, such as anti - money management laundering and terrorist financing, and compliance management, risk management, and the strengthening of internal control departments, and the application of the principles of corporate governance that promote strong oversight and disclosure and transparency. Banks have seen since the introduction of entry to sell the currency window standards a wide range of measures such as development units and the appointment of people with competence and experience, and the appointment of international auditors, and all that is in the upgrading of the banking sector service, and to provide indicators for the safety of their operations so that they can deal with the outside world and open its channels financial with international financial institutions, which have become attached indicators involving the criteria laid great care. 4 - exchange rate stability requirements help the standards set in supporting the stability of the local currency exchange rate , which represents the main objectives of the monetary policy rate, since the development of buying and selling the dollar on the basis of sound and rules that would limit the phenomena of manipulation and speculation and the abolition of intermediaries (who divested the largest margin of exchange rate difference), the role of intermediaries has declined considerably because of requiring banks to follow the rules and regulations that have become reflected on the degree of standards and then on the Bank 's share in the entry window. In order to achieve the above objectives have been seven criteria for the classification of the adoption of entering banks to sell foreign currency window. What are these criteria and what are the identified mechanism? Starting must be noted that this classification is not rated for the performance of banks in general (which is what we say in the daily sales prospectus), but it reflects the degree of compliance by the bank with the rules relating to the sale and purchase of foreign currency. The public banks evaluated in terms of general conditions (performance and efficiency) , it being in accordance with other international standards , most notably the International Standard (CAMELS) , which serves as an early warning classified banks , which on the basis of solvency capital C, and asset quality A, management M, profitability E, liquidity L and analysis sensitivity to market risk, which is expressed in each of the elements of a number of financial indicators, and the Central Bank to conduct this assessment in 2013 by the Office of international scrutiny, and due to the lapse of several years, it is currently being re this assessment and we hope that we finish it soon, as it will explain The banking sector 's performance and the efficiency and performance of the banks, and would be part of the current criteria used in the classification of banks for the purposes of access to the window. As for the classification of banks to enter the sale of foreign currency window , it is based mainly on the basis of the extent of banks with anti - money - laundering and the financing of terrorism, and the instructions of the Central Bank in the context of due diligence commitment as well as the legitimate uses of currency transfers abroad, as was organized this process through a number of standards and mechanisms that could be clarified through the following points: first: classification standards banks classification depends seven basic criteria of which other sub - branch is given a relative weight of each of which contributes to determine the final division of the Bank, namely: 1. compliance with ( the degree of compliance with the rules and procedures Kavhh money laundering and the financing of terrorism) and has the biggest weight. 2. Comply with foreign currency window. 3. Standard dealing with correspondent banks in terms of being certified and classified internationally. 4. Match the bank statements with the statements of correspondent banks. 5. meet the demands of customers and within the elements of the number of branches of the bank. 6. lawsuits against the bank. 7. contracting with an international auditing firm, and takes into account the date of establishment of the bank, as it is downloaded five degrees degrees of banks that have not only been established more than a year. Second , a review of the classification and change the grades given to the banks are constantly changing according to the extent of the banks commitment to the requirements and procedures in accordance with the audit and inspections conducted by the Central Bank, or by providing bank proof of improved compliance with the standard or more, the Bank is being periodically reviewed for banks all, and share a number of from the departments of the Bank and its formation in the evaluation process , according to the standard type and the competence of the department or configuration, which provides high credibility and objectivity. Third: the transparency of classification , the Central Bank to provide each bank in degrees granted according to each criterion according to each element of each standard, and gives the bank an opportunity to object or make notes, and holds a higher committee headed by the Deputy Governor and the membership of an advanced staff in the Bank 's review notes or objections to the process and the interview involved in Bank, can be adjusted according to the assessment are presented by the bank, knowing that this door is always open to the bank at any time feel that it has made progress in the application of the rules mentioned. Finally , it must be said: The origin of the subject is to achieve effective control and procedures for precautionary required by Iraqi law and required by our commitments to international conventions and membership of international organizations concerned, and that compliance with these standards leads to avoid the risk of financial crime and the closure of financial institutions and outlets in front of the financing of terrorist operations, and lead also to improve the work of the Iraqi banking and enable it to build bridges and channels with the approved international financial institutions. Here , we say to some of those who may be affected by these measures: The damage on them will be greater in the event of non - compliance with them, as it exposes them to non - compliance with the standards mentioned to the serious consequences for their work such as reputation risk, legal and judicial risks, and closes them outside dealing outlets. The central bank , which live up to his work to the level of international best practices , it looks to support and by imputing concerned to enable it to fulfill its role and tasks, and assure everyone that he is ready to accept all noticeable or criticism to be constructive criticism and objective being in accordance with the channels of institutional order to preserve the reputation of this institution and its role in the development of the financial system, particularly in light of the financial crisis we are experiencing and the challenges that emerged in order to preserve economic stability in Iraq through achieving financial and monetary stability.

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Identify seven key criteria related to the participation of banks sell foreign currency window


11/06/2017


Select the Central Bank of Iraq on Sunday, seven key criteria related to the participation of banks sell foreign currency window, indicating that the dollar put the sale process in the framework responds to legal, regulatory and local and international regulatory requirements.

The governor of the bank on the Keywords in a statement, "the trend Press obtained" a copy of it, "the Central Bank of Iraq began since the beginning of this year, the adoption of specific weighting criteria concerning the participation of banks in the sale of foreign currency window (dollar)," noting that "this comes after nearly a year of preparation and consultation for the development of such standards as currently drafted, as these criteria were given a certain degree relative is a total final score of the bank, which in turn determines its share of the quantity sold foreign currency every day. "

He added that "it was seven basic criteria for the adoption of the classification of banks for the purpose of entering the window of the sale of foreign currencies branching out of which other sub-given each relative weight contributes to determining the final grade of the bank," noting that the criteria are "compliance with (the degree of compliance with the rules and procedures to combat money laundering and the financing of terrorism) and have the greatest weight, compliance with the instructions of the foreign currency window, standard dealing with correspondent banks in terms of being certified and classified internationally, match bank statements with the statements of correspondent banks, to meet the demands of customers and within the elements of a number of bank branches, lawsuits against the bank, contracting P international auditing firm and takes into account the date of establishment of the bank as it is downloaded five degrees degrees of banks that have not only been established more than a year. "

He added Keywords that "public banks evaluated in terms of general conditions (performance and efficiency) , it being in accordance with other international standards , most notably the International Standard ( CAMELS ) , which serves as an early warning banks are classified under which on the basis of capital adequacy the C , and asset quality A , management M , profitability E , liquidity L' , and sensitivity analysis to market risk, which is expressed in each of the elements of a number of financial indicators. "

He explained that "a review of grades given to the banks are constantly changing according to the extent of the banks commitment to the requirements and procedures in accordance with the audit and inspections conducted by the Central Bank, or by providing bank proof of improved compliance with the standard or more, the Bank is being periodically reviewed for banks all, and involved a number of Bank and its formation circles in the evaluation process, according to the standard type and the competence of the department or configuration, which provides high credibility and objectivity. "

He noted the Keywords, that "the Bank shall provide each bank in degrees granted according to each criterion according to each element of each standard, and gives the bank an opportunity to object or make notes, and holds a higher committee headed by the Deputy Governor and the membership of an advanced staff in the Bank's review notes or objections and meet the relevant process in the bank, and it can be adjusted according to the assessment is presented from the bank, "adding that" the door is always open to the bank at any time feel that it has made progress in the application of the rules mentioned. "

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On the other hand, and that Iraq is dealing mainly in the currency of the dollar (due to the fact that pegged the dinar to the dollar), and the country 's foreign transactions are done, this makes Iraq subject to the procedures and rules of trading and the movement of the US dollar set by the US Federal Bank and the US Treasury , which aims to control the movement of the dollar investigated to curb money laundering and terrorist financing, thus resulting states (including Iraq) to design the rules and procedures necessary to monitor the movement of the dollar and to identify the paths used systems and move from one place to another.