PASHA_BANK ANNUAL REPORT 2021

105 Annual Report 2021 PASHA Bank • Development of compliance models for new products and services to be in compliance with MASAK regulations and issuing opinion before implementation of these models. • Coordination of support service procurement process based on BRSA regulations. • Within the scope of compliance with ethical principles; management of the internal communication system, Ethics Hotline, which was established within the scope of Ethical Principles of PASHA Yatırım Bankası A.Ş. and monitoring of measures taken to prevent conflicts of interest under ethical principles discipline. • Management of MIDES and customer complaint resolution process within the scope of protection of the interests of customers. • Development and organization of training programs intended for the prevention of laundering of proceeds of crime and combatting the financing of terrorism and conducting activities for improving the compliance culture. • Development and improvement of existing embargo and sanction list controls under the scope of financial security and monitoring and controlling activities under the scope of prevention of laundering of proceeds of crime and combatting the financing of terrorism. • Application of controls at customer acceptance stage, before and after establishing SWIFT, account etc. relations with banks within the scope of prevention of laundering of proceeds of crime and combatting the financing of terrorism. Monitoring of suppliers within the scope of the prevention of laundering of proceeds of crime and combatting the financing of terrorism. Application of controls both within this scope and in terms of conflicts of interest under the ethical principles sub‑discipline before establishing relations. Following up best practices and local legislation for FATCA and CRS (Common Reporting Standards), making adjustments within the Bank and preparing the reports. Risk Management Department The Risk Management Department continued to monitor at regular intervals credit risk concentrations, quality of assets, the risk in the financial asset portfolio, and the operational risks that were exposed to in accordance with the internal policies and rules and risk limits approved by the Board of Directors. The Risk Management Department carried out the following activities in 2021: Risk maps regarding the risks the Bank is exposed to, key risk indicators, risk reducing actions were monitored within the frame of Operational Risks. The areas in need of improvement regarding the Bank’s operational risks are identified and the necessary measures were taken together with the relevant teams within the Bank. In terms of Market Risk, relevant regulatory reports were prepared and market risk capital adequacy was calculated. Risks that our Bank may be exposed due to fluctuations in market prices were measured. Balance sheet and off‑balance sheet foreign currency positions were followed and reported based on internal and regulatory limits. These reports were shared with Asset Liability Committee (ALCO) and Risk Management Committee and risk reduction techniques were implemented based on senior management views when necessary. The structural interest rate risk due to term discord in the structure of the Bank’s Balance sheet was monitored through gap analysis under the scope of Structural Interest Rate and Liquidity Risk. The executed stress tests were debated at the Asset‑Liability Committee and Risk Management Committee. The Bank’s liquidity level is being monitored with both TL ‑ FX and as total liquidity. The liquidity adequacy was tested under various stress assumptions of which the results were submitted regularly to the relevant Committees and Senior Management.