Sheludko Sergii, PhD (Economics), Associate Professor of the Department of Banking, Odesa National Economic University, Odesa, Ukraine

ORCID ID: 0000-0003-0636-4940
e-mail: s.szeludko@gmail.com

Yehorova Anastasiia, Student of the Faculty of Finance and Banking, Odesa National Economic University, Odesa, Ukraine

ORCID ID: 0000-0003-0030-8307
e-mail: anastasiia.eee@gmail.com

The Essence of Compliance and its Place in Banking Risk Management

Annotation. Introduction. The versatility of modern international banking, instability of the global financial environment and dynamism of normative regulation necessitates a strong need not only to implement standards and regulations of banking, but also to follow such guidelines and monitor compliance with their principles and norms. In such conditions, the study of the essence, organizational and economic principles and features of the practical implementation of compliance in banks is a particularly important scientific task.

Purpose. The aim of the paper is to study the scientific and theoretical foundations, analysis of the compliance system in conditions of internationalization of the banking business.

Results. It has been determined a historical prerequisites of “compliance” and it has been offered the own definition of compliance which means a system of the actions carried out for the purpose of observance of internal rules and external requirements at the same time as a whole by the organization, its separate divisions and employees. It has been confirmed the essential value of the qualitative classification of banking risks, which is used as a result to find reserves to improve the efficiency of risk management of banking operations. The compliance system has been presented in terms of elements that affect the implementation of compliance risk. Compliance risk as a non-financial banking risk has been studied and determined that it can be both a source and a consequence of the realization of other types of risk. It has been analyzed the structure of compliance costs of banks and financial institutions of European Union in 2019.

Conclusions. In order to increase effective compliance control in the international banking business, artificial intelligence technologies are used. It has been concluded that in the future banking institutions should focus on developing a strategy that will at the same time reduce costs and maintain a reliable system of compliance.

Keywords: compliance; compliance control; compliance risk; international banking business; risk.

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