The Palestine Islamic Bank is committed to implementing and following the highest standards of good governance in banking, especially with regard to Islamic banking. To ensure this PIB adopts an internal system of governance based on local regulations and international best practices in the field.

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 agreed annual strategy, goals and objectives of the bank. The board ensures the effectiveness & efficiency of the bank’s internal control and oversight systems to support the bank's operations and protect the resources of the bank, ensuring accurate financial and operational reporting 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 banking standards of self-regulation and compliance, PIB’s Compliance Control department was created as an independent function tasked with identifying and assessing the risk of non-compliance with laws & regulatory requirements. The department assesses the risk of non-compliance and any resulting reputational damage or financial losses that may follow.

The Compliance Control department provides guidance to all the bank’s departments with the aim of promoting a culture of compliance throughout the institution. The department implements all necessary measures to abide by international laws and 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 any illegal activity or financial irregularity. PIB’s policy has been developed in line with the legal provisions of AMLA 20/2015 and the instructions issued by the Palestine Monetary Authority, as well as international standards and regulations.

Palestine Islamic Bank is committed to adhering to all local and international laws and directives, including the International Financial Action Group recommendations (FATF), the UN Security Council resolutions and the decisions of the Basel Committee on combatting money laundering and the financing of terrorism through comprehensive policies and procedures approved by the Board of Directors.

Palestine Islamic Bank is committed to universally adopted principles and policies with respect to risk management. The Bank maintains a strong risk management environment to manage the balance between risk incurred and revenue, striving to achieve returns of a high level on the bank’s portfolio as a whole whilst mitigating risk.

As a result, PIB has developed a common framework for risk management covering all types of key risks, such as credit risks, market risks, operational risks, and liquidity risks, which face the bank in the normal course of conducting business.

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 programs 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 a priority and essential policy and 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 analyzing the bank's risk profile and applying and developing methods to monitor risks.
  • Designing and developing clear criteria to define and identify each type of risk.
  • Developing methods and methodologies to measure each type of risk to the bank.
  • Auditing 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 the 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 making necessary recommendations & adjustments.
  • Performing stress tests periodically in accordance with approved policies and instructions.

PIB’s internal auditing procedures are conducted as an independent, objective activity to ensure quality and 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. This is done 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 the Board’s Review and Audit Committee.

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