OBB key terms

A local statute that licenses and supervises banks, sets entry criteria, and empowers the regulator to issue prudential rules and take supervisory action against institutions operating in the jurisdiction.

The minimum conditions an applicant must satisfy to obtain a banking licence, typically covering capital adequacy, fit and proper management, sound business plans, and adequate controls and premises.

An assessment of whether directors, senior managers, and significant shareholders have the honesty, integrity, competence, and financial soundness required for their roles, applied at licensing and on an ongoing basis.

The regulator's ongoing evaluation of an institution's capital adequacy, risk profile, and control environment, including periodic examinations, off-site analysis, and dialogue with management about remedial actions.

Formal measures a regulator may impose when an institution breaches rules or shows weaknesses, such as warnings, restrictions on business, additional capital requirements, or appointment of advisers.

Scheduled submission of financial, prudential, and risk data to the supervisor in prescribed formats, enabling off-site monitoring and comparison of institutions against regulatory limits.

The governing body accountable for the institution's strategic direction, risk appetite, and oversight of management, including approving policies and ensuring an effective control environment.

The duty of executive officers to implement board-approved strategy and policies, manage day-to-day risks, and maintain controls within their areas of accountability.

A control model in which business units own risk, a separate risk and compliance function monitors it, and internal audit provides independent assurance to the board.

An independent function that evaluates the adequacy and effectiveness of controls, risk management, and governance, reporting findings to the audit committee or board.

A dedicated team that identifies regulatory obligations, advises the business, monitors adherence, and reports compliance risks to senior management and the board.

A formal articulation of the types and levels of risk an institution is willing to accept in pursuing its objectives, guiding limits, product decisions, and escalation thresholds.

An integrated approach to identifying, measuring, monitoring, and controlling all material risks across the organisation, linking risk decisions to strategy and capital planning.

Policies, procedures, approvals, reconciliations, and system safeguards designed to prevent or detect errors, fraud, and regulatory breaches in day-to-day operations.

The risk of loss from failed internal processes, people, systems, or external events, including fraud, technology outages, and errors in transaction processing.

The risk that a borrower or counterparty fails to meet contractual obligations, causing the institution to suffer loss on loans, securities, or derivative exposures.

The risk that an institution cannot meet payment obligations as they fall due without incurring unacceptable losses, often arising from mismatches in asset and liability maturities.

A measure comparing regulatory capital to risk-weighted assets, indicating whether an institution holds enough capital to absorb unexpected losses relative to its exposures.

Analysis of how portfolios and earnings perform under severe but plausible scenarios, used to size capital needs, set limits, and inform contingency planning.

Documented arrangements for maintaining or restoring critical operations during disruptions, including backup systems, alternate sites, and communication protocols.

Delegation of a function or process to an external provider, which requires due diligence, contractual safeguards, and ongoing monitoring because accountability remains with the institution.

Procedures to identify customers, understand their business and expected activity, and verify identity using reliable documents before establishing a relationship.

Laws, rules, and internal programmes aimed at preventing the use of financial services to disguise the proceeds of crime, including monitoring, reporting, and staff training.

Ongoing assessment of a customer's risk profile, beneficial ownership, source of funds, and transaction patterns, with enhanced measures for higher-risk relationships.

An individual entrusted with prominent public functions, or a close associate or family member, who presents higher corruption risk and requires enhanced due diligence and senior approval.

A confidential filing to the financial intelligence unit describing transactions or activity suspected of involving criminal proceeds or terrorist financing, made without tipping off the customer.

A conduct principle requiring fair treatment across the product lifecycle, including clear disclosure, suitable advice, fair pricing, and proper handling of complaints and claims.

The process of matching a product or recommendation to a customer's financial situation, objectives, risk tolerance, and experience before concluding a sale or advice.

Provision of key information about a financial product, including features, risks, fees, and terms, in a form the customer can understand before deciding.

Situations where personal, commercial, or group interests could improperly influence decisions affecting customers, requiring identification, disclosure, and management through controls such as segregation.

A documented process for receiving, investigating, and resolving customer complaints fairly and promptly, with escalation, recordkeeping, and root-cause analysis feeding service improvements.

Standards governing how institutions and staff behave in markets, covering fair dealing, order handling, confidentiality, and prohibition of manipulative or deceptive practices.

Prohibited behaviour including insider dealing, unlawful disclosure of inside information, and market manipulation that undermines the integrity and fairness of financial markets.

An information barrier separating teams with access to confidential or price-sensitive information from those who trade or advise, preventing improper use or leakage.

A statement of the values and behavioural standards expected of staff, such as integrity, objectivity, confidentiality, and competence, supported by training and disciplinary consequences.

A protected channel through which staff can report suspected wrongdoing or breaches internally or to authorities without fear of retaliation, supported by clear procedures and confidentiality.

Rules obliging institutions to retain accurate records of transactions, customer relationships, communications, and decisions for prescribed periods, accessible to regulators on request.

Publication of prescribed information about an institution's financial condition, risk exposures, and governance, allowing market participants to assess its soundness and compare peers.