PASHA BANK ENG 20

Suggestions were made for deficiencies and weaknesses detected as a result of the activities of the Internal Control Department and resolutions of findings were monitored based on a specific action plan. Control activities designed for this purpose were conducted by internal control personnel competent and experienced in their areas. Local and international developments in internal control area were followed up and the Bank’s internal control applications were updated. In 2020, all operational activities of the Bank were reviewed on a changing frequency and on a need basis for control points and control results were reported to the Risk Committee and senior management. In addition, management statement tests and ICAAP Report validations were performed. During the global pandemic period in 2020, Internal Control Unit coordinated the business sustainability activities of the Bank and as a result of these activities, the Unit provided the necessary practices and infrastructure for remote working methodology as of the earliest time the COVID-19 pandemic was observed in Turkey, being one of the first banks in Turkey that worked remotely. Furthermore, Internal Control Unit took the lead in preparing the audio training materials for the Business Sustainability Awareness and Operational Risk programs which are among the compulsory courses for Bank employees and which could not be organized face-to-face due to the yearlong pandemic, as online training being the first time in our Bank. Compliance Department In accordance with Law 5549, 6415 and related legislation, Compliance Department conducted the following compliance activities in 2020: The monitoring and controlling activities that are in line with the scope of activities of the Bank are improved, all the activities were carried out with the aim of full compliance of all of the Bank’s activities with MASAK legislation and other related legislation.. Activities were carried out for alignment of the internal regulation, code and procedures with MASAK legislation and other related legislation. Compliance models were designed for new product and services within the scope of compliance with MASAK legislation, opinions were issued pre- implementation and the process of support service procurement was coordinated in accordance with the BRSA regulations. · Within the scope of compliance with ethical principles, the measures taken for preventing conflicts of interest under the ethical principles discipline and for managing the internal notification system were supervised. MIDES and customer complaint resolution process are being managed within the scope of the protection of the interests of customers. · Compulsory training programs intended for the prevention of laundering of proceeds of crime and combating the financing of terrorism were organized and activities were carried out for improving the compliance culture. The existing monitoring, screening and controlling activities were pursued and improved regarding the embargo controls and the prevention laundering of proceeds of crime and combating the financing of terrorism under the scope of financial security. Controls were executed at customer acceptance stage and before and after establishing SWIFT, account etc. relations with banks regarding the prevention of laundering of proceeds of crime and combating the financing of terrorism The monitoring and controlling of the suppliers are carried out under the scope of the prevention of laundering of proceeds of crime and combating the financing of terrorism as well. Best practices and local legislation were monitored for FATCA and CRS (Common Reporting Standards), adjustments were made within the Bank and mandatory reports were prepared. 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 2020: 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 Assessments of the Audit Committee on the Activities of Internal Systems 96 Annual Report 2020 PASHA Bank Financial and Risk Management Review