VTB
Group Today
Management
Report
Corporate
Governance
Sustainable
Development
Financial
Statements
Annexes
Audit
Committee
The
Internal Audit Department liaises
with
the Audit Committee and independent
auditors,
providing information
on
the internal control system and reporting
any
shortcomings during the audit period.
Compliance
control
The
Bank is a permanent member
of
specialised committees of professional
associations:
the Association of Russian
Banks
(the Russia Association),
the
National Financial Market Council
and
Rosfinmonitoring’s Compliance
Council.
As a permanent member,
The
Audit Committee operates as part of the structure
The
Bank has a Compliance Control and Financial Monitoring
Department
(hereinafter in this section the Department), whose main
objectives
are to build an internal control system to manage regulatory
(compliance)
risks and to prevent money laundering and the financing
of
terrorism (AML/CFT) and financing of the spread of weapons of mass
destruction
(WMD).
of
the Supervisory Council in order to facilitate the effective
performance
of
the functions of the Supervisory Council in the area of control
over
the Bank’s financial and economic activities. More detailed
information
on the composition and activity of the Audit Committee
can
be found in the section Corporate Governance / Supervisory
Council
/ Supervisory Council Committees.
The
Audit Committee conducts an annual
evaluation
of the effectiveness of the internal
audit
process. In 2020, the results of internal
audit
activities for 2019 were recognised as fully
consistent
with the established purpose
and
objectives1.
the
Bank takes part in the development
of
legislative initiatives, proposes
The
Department ensures that the Bank complies with the applicable
laws
and Bank regulations on AML/CFT and on the spread of WMD. It
also
assists the Bank’s divisions in performing tasks related to business
operations
and business support with respect to regulatory compliance
in
areas such as managing compliance risk, preventing the use of
insider
information
and market manipulation, managing conflicts of interest
and
combating corruption.
improvements
to regulatory requirements
in
the area of AML/CFT and compliance,
and
also – together with representatives
of
specialised private sector organisations
and
government agencies – develops
integrated
solutions and uniform approaches
to
the implementation of these requirements.
Internal
Audit Department
The
Internal Audit Department provides direct support to the Bank’s
governing
bodies to ensure that VTB Group works efficiently
and
effectively. The Internal Audit Department monitors internal control
systems,
conducts audits and provides impartial recommendations
for
improving banking operations and control procedures.
The
Internal Audit Department has developed
and
is implementing an Internal Audit
Quality
Assurance and Quality Improvement
Programme,
which covers all aspects
of
the internal audit function.
Recognising
the importance and special significance of combating
money
laundering, the Bank has always singled out this area as one
of
its highest priorities, where compliance with oversight requirements
is
mandatory and unconditional.
The
Department regularly monitors
compliance
with business ethics and anti-
corruption
requirements. The Bank has
established
a system for receiving information
from
employees about violations and corrupt
practices,
including in terms of conflicts
of
interest, corruption and violations
of
business ethics. The Department
analyses
submissions, determines
the
cause and provides recommendations
to
the Bank’s divisions on how to resolve
situations
and to prevent them from arising
in
the future.
The
Internal Audit Department is an independent structural unit of VTB
Bank
and operates under the direct supervision of the Supervisory
Council.
The Supervisory Council approves the Internal Audit
Department’s
work plans and monitors their implementation,
reviews
the Internal Audit Department’s reports on the results
of
audits and on monitoring of the internal control system, and also
reports
on the implementation of the Internal Audit Department’s
recommendations
to address previously identified issues.
According
to the Regulation on the Bank’s
Internal
Audit Department, the Department’s
activities
are subject to a regular external
independent
assessment at least once
every
five years. The last time an external
independent
assessment of the Bank’s internal
audit
function was carried out was in 2019
by
PwC. Assessments are conducted
In
2020, the Department, together with the Bank’s business divisions,
implemented
a number of innovative digital projects focused
on
automated solutions and remote communication with clients,
which
enabled the Bank to make progress towards creating more
comfortable
working conditions for customers and business divisions
in
the traditionally conservative area of compliance.
The
Internal Audit Department’s organisational structure comprises
a
number of units responsible for auditing the lending process, non-
credit
business processes, regional divisions, digital auditing of
processes
and
information technologies, as well as auditing within the Group.
To
improve the effectiveness of the monitoring of the internal control
system
in the Bank’s regional branches, the structure of the Internal
Audit
Department includes dedicated internal control teams
at
the branch level.
to
determine the degree of compliance
of
the Bank’s internal audit function
with
international professional standards,
recommendations
and requirements
of
the Bank of Russia and the Federal Agency
for
State Property Management. International
internal
audit standards were developed
in
light of the extensive experience
of
the world’s leading financial and non-
financial
organisations, and they are among
the
most important universally recognised
guidelines
on internal audit. The assessment
concluded
that VTB’s internal audit function
is
fully compliant with international standards
and
the Internal Audit Code of Ethics.
The
traditional screening of new (potential) clients, which is mandatory
for
all financial institutions, now takes less time – a decision is made
literally
in seconds and without the involvement of a Bank employee.
The
Bank also eliminated the need for clients to visit a Bank office
for
an interview, resulting in much faster acceptance as clients.
In
addition, the procedure for updating client information on an annual
basis
was simplified: now documents can be sent to the Bank
electronically
through our remote banking service (RBS).
On
a daily basis, the Bank analyses
its
products and services; regulatory
documents,
at the request of supervisory
authorities;
and customer requests, to assess
them
from the standpoint of possible
regulatory
(compliance) risks, their potential
consequences
and mitigation measures.
Information
concerning regulatory
(compliance)
risk, with a breakdown
by
business areas, is reported to the Bank’s
designated
authorities on a quarterly basis.
In
2020, the Internal Audit Department conducted 27 scheduled audits
and
control measures, including 17 audits of various activities within
the
parent company and 10 audits of operations in Bank branches.
In
addition, as part of its ongoing monitoring, Internal Audit
Department
staff
members conducted 707 thematic audits at the branch level.
Through
integration with state systems and services, the Bank has
begun
receiving in digital form the bulk of the information that it
needs
to comply with the principle of know your customer; this reduces
the
burden on customers to respond to requests for information.
In
addition to conducting audits and monitoring the Bank’s internal
control
system, the Internal Audit Department’s priority is operational
oversight
as well as the coordination and maintenance of the same
level
of practice and competencies in terms of internal audit within
subsidiaries.
In 2020, the Department carried out 11 control measures
related
to the Group’s subsidiary companies and banks. The Internal
Audit
Department also regularly analyses reports on the work of Group
companies’
internal audit services.
The
high level of maturity of the Internal
Audit
Department was noted in terms
of
its objectivity, professionalism and use
of
advanced approaches and technologies.
As
a leader in the use of new technologies to combat money
laundering,
the Bank is taking part in several new pilot projects run
by
Rosfinmonitoring, and it plays an active role in discussing issues
that
require
the involvement of the banking community. The Bank of Russia
also
considers VTB to be an institution that makes every effort to
achieve
the
shared goal of keeping out of the financial sector those actors
whose
goals are to conduct grey transactions, to evade taxes or to carry
out
shady operations.
In
2020, the Bank took part in the Anti-
Corruption
Rating of Russian Business
conducted
by the Russian Union
of
Industrialists and Entrepreneurs, which
designated
the Bank as a class A1 institution
–
an organisation or company that exercises
the
highest level of corruption prevention
and
demonstrates a minimal corruption risk.
To
enhance the level of professionalism and improve the exchange
of
experiences, on-the-job training is provided for staff from the
internal
audit
services within Group companies, including the involvement
of
VTB Group functional coordinators.
1.
Minutes
No. 169 of the Bank’s Supervisory Council Audit Committee dated 31
March 2020.
Annual
Report ‘20
//vtb.com
180
181
