Supervisory and Control

The Bank's Board of Directors is responsible for the adoption & approval of working procedures and the organizational structure of departments and branches to achieve the annual strategy, goals and objectives of the bank. The board also ensures the effectiveness & efficiency of the internal control and oversight systems to support the bank's operations and protect the resources of the bank, ensuring accurate financial and operational data on a regular basis and in a timely manner, as well as compliance with laws and regulations governing the work of the bank.

In line with international standards with regards to self-regulation & compliance within banks, the Compliance Control Department was created as an independent function tasked with identifying and assessing the risk of non-compliance with laws & regulatory requirements. It is also concerned with some of these risks being non-compliant with regulations, the resulting financial losses and the risk to reputation that may be suffered by a bank as a result of non-compliance with the rules and codes of conduct and standards of good practice.

The department provides guidance to all departments within the bank & services with the aim of promoting a culture of compliance throughout all levels of the institution as a whole. The department also implements all that is required to abide by international laws and mainly all requirements of tax cooperation laws including the American Tax Compliance Act (FATCA).

Palestine Islamic Bank is committed to applying sound banking rules and legal norms in order to prevent the exploitation of Palestine Islamic Bank by people with suspicious activities detrimental to the reputation and credibility of the Bank.

This policy has been developed in accordance with the legal provisions and AMLA 20/2015 and the instructions on this subject issued by the Palestine Monetary Authority, adding to the international standards and recommendations of various committees in this regard.

Palestine Islamic Bank is committed to adhering to local and international laws and directives, including the international financial action group recommendations (FATF) and UN Security Council resolutions and decisions of the Basel Committee on combatting money laundering and financing of terrorism through a comprehensive policy and procedures as approved by the Board.

Palestine Islamic Bank is committed to universally adopted principles and policies with respect to risk management. The Bank also maintains a strong risk management environment to manage the relationship and balance between risk incurred and revenue which strives to achieve returns of a high level on the bank’s portfolio as a whole and at the level of each branch and all services.

As a result, a common framework for risk management of the bank was developed which was reflected in the manuals created for all types of key risks facing the bank in the normal course of conducting business with the key risks including credit risks, market risks, operational risks, and liquidity risks.

The Board of Directors decides on the overall acceptable levels of risk and diversification, asset allocation strategies for each fund and each economic activity and geographical region.

Palestine Islamic Bank is also committed to the universally adopted principles and policies with respect to risk management, where risk management is an integral part of the decision making process at the bank. The bank also maintains an effective risk management environment to manage the relationship and establish balance between risk incurred and revenue thus striving to achieve the revenue on the bank’s portfolio as a whole and at the level of each of its branches and services separately.

The Board of Directors determines the overall levels of risk and diversification, asset allocation strategies for each fund and each economic activity, geographical area, currency & timed deposits.

The following are the basic features of our risk management policy:

  • The Board & the Risk Management Committee adopts policies, regulations and comprehensive action programmes and procedures designed to effectively manage risk, and provides guidance and insights for managing risks for the bank.
  • The Board & the Risk Management Committee continuously review and approve the scenarios that are used in risk analysis and assumptions measurement mechanisms.
  • Risk management is an essential policy & procedure for the bank and is considered a key competence for all employees.
  • The bank also applies a rigorous auditing policy within the framework of the application of risk management in the bank.
  • The bank implements the decisions & instructions with (Basel II) as well as those of the Palestine Monetary Authority (PMA) issued in particular within the framework of the risk to the Bank as follows:
  • Application of capital adequacy within the (Basel II) framework where this framework has set the standards for new regulations for calculating capital adequacy and maintaining a minimum capital requirement to cover credit risks and markets (standard entry methodology ), and operational risks (according to the agreed benchmark).
  • The Bank also implements stress tests within the second pillar of the (Basel II) framework where these tests are intended to strengthen the process of identifying and controlling risks, providing complementary risk management tools to manage risk and improve the bank in terms of capital and liquidity.
  • The bank also regularly develops written policies and procedures in relation to the foundations of the bank which are then followed by a process of internal evaluation of its capital (ICAAP) which aims to develop and use better methods for risk management, in addition to measuring and assessing the adequacy of capital to absorb all of the risk to the bank.

The risk management department also assists senior management in the effective control of risks to the bank where the main task of risk management services include:

  • Ensuring that the bank's overall strategy and risk policies, procedures and methodologies are compatible with the acceptable risk limits.
  • Evaluating and analysing of the bank's risk profile and applying and developing methods to monitor risks.
  • Designing and developing of clear criteria to define and identify each type of risk.
  • Developing methods and methodologies to measure each type of risk to the bank.
  • Auditing of the policies and procedures in place to protect the bank from all risks that they may face.
  • Working on coordinating efforts to implement the decisions of the (Basel II) framework and instructions of Palestine Monetary Authority.
  • Recommending strategies and actions to mitigate the risks to the bank.
  • Ensuring up-keep with infrastructure for risk management and internal control of changes and developments.
  • Preparing, updating and evaluating business continuity management plans and make necessary recommendations & adjustments.
  • Performing stress tests periodically in accordance with approved policies and instructions.
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An independent, objective activity to ensure quality and aiming to improve and add value to operations through the application of disciplined methods in order to develop and evaluate the effectiveness of our risk management activities and in accordance with international standards and compliance regulations and in line with best practices in the banking sector.

The Internal auditing department reports administratively and technically to the Board’s Review and Audit Committee ensuring independence from the Executive Management of the bank. The Internal Audit Department applies a methodology of risk based auditing and does regular checks on all departments and branches of the bank in relation to the work plan approved by Board’s Review and Audit Committee. Audit reports are prepared and responses with planning and following up for purposes of correction with all and authorities and branches under scrutiny.

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