Risk management and internal control
The ProCredit group applies a standardised and comprehensive framework of rules and policies for risk management, internal control and the prevention of money laundering and other criminal offences. All ProCredit banks are required to follow centrally set standards. The implementation of this framework is monitored regularly by ProCredit Holding. Group risk management and anti-money laundering policies are in line with German and European banking regulations and are updated annually to reflect new developments. ProCredit is firmly committed to transparency and takes a conservative approach to risk management. Furthermore, each institution follows the “four-eyes principle”, ensuring that significant transactions are independently cross-checked.
The key principles that underpin our conservative approach to risk management are:
• Focus on core business
• High degree of diversification, transparency and simplicity
• Careful staff selection and intensive training
These principles allow the group to manage effectively the material risks the group is exposed to, the most important risk being credit risk. The policies and their implementation are audited by the internal audit teams at the banks and at the holding company, as well as by the group’s external auditor.
All ProCredit institutions have a strong, independent internal audit function supported by ProCredit Holding’s Group Audit team and by an Audit Committee, which both report to the ProCredit Holding Management Board. ProCredit Holding takes the lead responsibility for the appointment and training of staff in the Internal Audit Department of each institution.
As the “Hausbank” for small and medium entrepreneurs, ProCredit institutions make an important contribution to the economic and social development of the countries in which they operate. In doing so, the ProCredit group places great importance on providing transparent and socially responsible banking services. Our strict code of conduct and our exclusion list, which documents our unwillingness to enter into business relationships with individuals and companies whose activities are incompatible with our ethical values, form a binding frame of reference for all of our staff members. Based on how we see our role, we have imposed the strictest of standards on ourselves in order to combat money laundering, terrorist financing and other offences such as fraud and embezzlement. We consider combating money laundering to be essential to achieving our goal of promoting transparent and stable financial intermediation. It is our belief that taking rigorous action against suspicious clients and transactions makes a significant contribution to the stability of the wider economy.
The minimum standards followed by all ProCredit banks are in compliance with the anti-money laundering regulations of the Federal Republic of Germany as well as the guidelines imposed by the European Union, the Basel Committee on Banking Supervision (BCBS) and the Financial Action Task Force (FATF). However, our internal guidelines exceed these minimum standards in many regards.
The core measures and precautions which we have adopted in order to combat money laundering, terrorist financing and other acts punishable by law can be summarised as follows:
Transparent client relationships:
Strict regulations are in place concerning the identification of clients (KYC – the know-your-customer principle). This prevents individuals with dubious intentions from gaining anonymous access to the financial system. We apply this principle just as strictly to companies with complex structures, in order to ascertain exactly who the natural persons behind the corporation really are.
To ensure that our staff are in a position to positively identify and “know” clients, we place great value on training. This includes mandatory courses for all new employees about the dangers of money laundering and what concrete measures can be taken to prevent it. In addition to this, staff are regularly trained with regard to new regulations and developments in the field of anti-money laundering.
Monitoring of client data, transactions and accounts:
We have introduced special software group-wide, which enables us to detect and closely analyse any potentially suspicious activities. Another software module ensures compliance with national and international sanctions and embargoes. In this way, we are able to guarantee that we neither enter into business relationships with persons or companies on international watch lists or blacklists, nor do we permit transactions in their name or to their benefit.
All banks in the group apply the FATF-recommended risk-based approach. This means that besides applying the standard measures, each ProCredit bank analyses its own country-specific money-laundering risks and undertakes all appropriate additional measures.
Anti-money laundering officers:
Every ProCredit bank appoints an anti-money laundering officer, who reports directly to the management board. Our anti-money laundering staff are responsible for applying the group-wide guidelines aimed at preventing money laundering, terrorist financing and other offences such as fraud and embezzlement. They co-operate with the local law enforcement authorities and report on economic crimes or suspicious clients and transactions, both to the management board and supervisory board of their own bank as well as to the ProCredit group-level anti-money laundering officer.
For more information, please contact: PCH.firstname.lastname@example.org